Correlation Between DongWon Development and Dongjin Semichem
Can any of the company-specific risk be diversified away by investing in both DongWon Development and Dongjin Semichem 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 DongWon Development and Dongjin Semichem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DongWon Development CoLtd and Dongjin Semichem Co, you can compare the effects of market volatilities on DongWon Development and Dongjin Semichem 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 DongWon Development with a short position of Dongjin Semichem. Check out your portfolio center. Please also check ongoing floating volatility patterns of DongWon Development and Dongjin Semichem.
Diversification Opportunities for DongWon Development and Dongjin Semichem
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DongWon and Dongjin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding DongWon Development CoLtd and Dongjin Semichem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongjin Semichem and DongWon Development 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 DongWon Development CoLtd are associated (or correlated) with Dongjin Semichem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongjin Semichem has no effect on the direction of DongWon Development i.e., DongWon Development and Dongjin Semichem go up and down completely randomly.
Pair Corralation between DongWon Development and Dongjin Semichem
Assuming the 90 days trading horizon DongWon Development CoLtd is expected to generate 0.44 times more return on investment than Dongjin Semichem. However, DongWon Development CoLtd is 2.29 times less risky than Dongjin Semichem. It trades about -0.09 of its potential returns per unit of risk. Dongjin Semichem Co is currently generating about -0.08 per unit of risk. If you would invest 295,000 in DongWon Development CoLtd on September 1, 2024 and sell it today you would lose (61,000) from holding DongWon Development CoLtd or give up 20.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DongWon Development CoLtd vs. Dongjin Semichem Co
Performance |
| Timeline |
| DongWon Development CoLtd |
| Dongjin Semichem |
DongWon Development and Dongjin Semichem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DongWon Development and Dongjin Semichem
The main advantage of trading using opposite DongWon Development and Dongjin Semichem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DongWon Development position performs unexpectedly, Dongjin Semichem 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 Dongjin Semichem will offset losses from the drop in Dongjin Semichem's long position.| DongWon Development vs. Busan Industrial Co | DongWon Development vs. Busan Ind | DongWon Development vs. Mirae Asset Daewoo | DongWon Development vs. Finebesteel |
| Dongjin Semichem vs. LG Chemicals | Dongjin Semichem vs. POSCO Holdings | Dongjin Semichem vs. Hanwha Solutions | Dongjin Semichem vs. Hyundai Steel |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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