Correlation Between Korea Zinc and Dongsuh
Can any of the company-specific risk be diversified away by investing in both Korea Zinc and Dongsuh 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 Korea Zinc and Dongsuh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Zinc and Dongsuh, you can compare the effects of market volatilities on Korea Zinc and Dongsuh 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 Korea Zinc with a short position of Dongsuh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Dongsuh.
Diversification Opportunities for Korea Zinc and Dongsuh
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Dongsuh is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Dongsuh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsuh and Korea Zinc 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 Korea Zinc are associated (or correlated) with Dongsuh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsuh has no effect on the direction of Korea Zinc i.e., Korea Zinc and Dongsuh go up and down completely randomly.
Pair Corralation between Korea Zinc and Dongsuh
Assuming the 90 days trading horizon Korea Zinc is expected to under-perform the Dongsuh. But the stock apears to be less risky and, when comparing its historical volatility, Korea Zinc is 1.09 times less risky than Dongsuh. The stock trades about -0.1 of its potential returns per unit of risk. The Dongsuh is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,325,000 in Dongsuh on November 29, 2024 and sell it today you would earn a total of 60,000 from holding Dongsuh or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Dongsuh
Performance |
| Timeline |
| Korea Zinc |
| Dongsuh |
Korea Zinc and Dongsuh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Dongsuh
The main advantage of trading using opposite Korea Zinc and Dongsuh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc position performs unexpectedly, Dongsuh 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 Dongsuh will offset losses from the drop in Dongsuh's long position.| Korea Zinc vs. SM Entertainment Co | Korea Zinc vs. Pan Entertainment Co | Korea Zinc vs. Alton Sports CoLtd | Korea Zinc vs. Hanil Chemical Ind |
| Dongsuh vs. Hyunwoo Industrial Co | Dongsuh vs. MetaLabs Co | Dongsuh vs. Jin Air Co | Dongsuh vs. Formetal Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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