Correlation Between Playgram and Dong A
Can any of the company-specific risk be diversified away by investing in both Playgram and Dong A 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 Playgram and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playgram Co and Dong A Steel Technology, you can compare the effects of market volatilities on Playgram and Dong A 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 Playgram with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playgram and Dong A.
Diversification Opportunities for Playgram and Dong A
Good diversification
The 3 months correlation between Playgram and Dong is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Playgram Co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel and Playgram 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 Playgram Co are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of Playgram i.e., Playgram and Dong A go up and down completely randomly.
Pair Corralation between Playgram and Dong A
Assuming the 90 days trading horizon Playgram Co is expected to generate 1.36 times more return on investment than Dong A. However, Playgram is 1.36 times more volatile than Dong A Steel Technology. It trades about -0.02 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about -0.06 per unit of risk. If you would invest 39,700 in Playgram Co on October 26, 2024 and sell it today you would lose (2,400) from holding Playgram Co or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playgram Co vs. Dong A Steel Technology
Performance |
| Timeline |
| Playgram |
| Dong A Steel |
Playgram and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playgram and Dong A
The main advantage of trading using opposite Playgram and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playgram position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Playgram vs. LG Chemicals | Playgram vs. POSCO Holdings | Playgram vs. Hanwha Solutions | Playgram vs. Lotte Chemical Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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