Correlation Between CBI and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both CBI and Dongwon Metal 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 CBI and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBI Co and Dongwon Metal Co, you can compare the effects of market volatilities on CBI and Dongwon Metal 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 CBI with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBI and Dongwon Metal.
Diversification Opportunities for CBI and Dongwon Metal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CBI and Dongwon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CBI Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and CBI 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 CBI Co are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of CBI i.e., CBI and Dongwon Metal go up and down completely randomly.
Pair Corralation between CBI and Dongwon Metal
Assuming the 90 days trading horizon CBI Co is expected to under-perform the Dongwon Metal. In addition to that, CBI is 1.0 times more volatile than Dongwon Metal Co. It trades about -0.32 of its total potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.26 per unit of volatility. If you would invest 145,400 in Dongwon Metal Co on September 3, 2024 and sell it today you would lose (33,500) from holding Dongwon Metal Co or give up 23.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CBI Co vs. Dongwon Metal Co
Performance |
| Timeline |
| CBI Co |
| Dongwon Metal |
CBI and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBI and Dongwon Metal
The main advantage of trading using opposite CBI and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBI position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| CBI vs. Dongwon Metal Co | CBI vs. MetaLabs Co | CBI vs. Shinhan Inverse Copper | CBI vs. Global Standard Technology |
| Dongwon Metal vs. HB Technology TD | Dongwon Metal vs. Hwangkum Steel Technology | Dongwon Metal vs. JYP Entertainment Corp | Dongwon Metal vs. TJ media 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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