Correlation Between Dongjin Semichem and Han Kook
Can any of the company-specific risk be diversified away by investing in both Dongjin Semichem and Han Kook at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dongjin Semichem and Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongjin Semichem Co and Han Kook Capital, you can compare the effects of market volatilities on Dongjin Semichem and Han Kook and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dongjin Semichem with a short position of Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongjin Semichem and Han Kook.
Diversification Opportunities for Dongjin Semichem and Han Kook
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongjin and Han is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dongjin Semichem Co and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital and Dongjin Semichem is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dongjin Semichem Co are associated (or correlated) with Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Dongjin Semichem i.e., Dongjin Semichem and Han Kook go up and down completely randomly.
Pair Corralation between Dongjin Semichem and Han Kook
Assuming the 90 days trading horizon Dongjin Semichem Co is expected to under-perform the Han Kook. In addition to that, Dongjin Semichem is 3.65 times more volatile than Han Kook Capital. It trades about -0.26 of its total potential returns per unit of risk. Han Kook Capital is currently generating about -0.05 per unit of volatility. If you would invest 55,900 in Han Kook Capital on September 5, 2024 and sell it today you would lose (600.00) from holding Han Kook Capital or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongjin Semichem Co vs. Han Kook Capital
Performance |
| Timeline |
| Dongjin Semichem |
| Han Kook Capital |
Dongjin Semichem and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongjin Semichem and Han Kook
The main advantage of trading using opposite Dongjin Semichem and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongjin Semichem position performs unexpectedly, Han Kook can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Han Kook will offset losses from the drop in Han Kook's long position.| Dongjin Semichem vs. LG Chemicals | Dongjin Semichem vs. Lotte Chemical Corp | Dongjin Semichem vs. Hyundai Steel | Dongjin Semichem vs. Dongkuk Steel Mill |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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