Correlation Between Dongwon System and Daou Tech
Can any of the company-specific risk be diversified away by investing in both Dongwon System and Daou Tech 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 System and Daou Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and Daou Tech, you can compare the effects of market volatilities on Dongwon System and Daou Tech 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 System with a short position of Daou Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Daou Tech.
Diversification Opportunities for Dongwon System and Daou Tech
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwon and Daou is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Daou Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Tech and Dongwon System 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 System are associated (or correlated) with Daou Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Tech has no effect on the direction of Dongwon System i.e., Dongwon System and Daou Tech go up and down completely randomly.
Pair Corralation between Dongwon System and Daou Tech
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Daou Tech. In addition to that, Dongwon System is 3.59 times more volatile than Daou Tech. It trades about -0.13 of its total potential returns per unit of risk. Daou Tech is currently generating about 0.0 per unit of volatility. If you would invest 1,836,000 in Daou Tech on August 30, 2024 and sell it today you would lose (1,000.00) from holding Daou Tech or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. Daou Tech
Performance |
| Timeline |
| Dongwon System |
| Daou Tech |
Dongwon System and Daou Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and Daou Tech
The main advantage of trading using opposite Dongwon System and Daou Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, Daou Tech 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 Daou Tech will offset losses from the drop in Daou Tech's long position.| Dongwon System vs. InfoBank | Dongwon System vs. Shinhan Inverse Silver | Dongwon System vs. Incar Financial Service | Dongwon System vs. Shinhan Financial Group |
| Daou Tech vs. Cube Entertainment | Daou Tech vs. Dreamus Company | Daou Tech vs. LG Energy Solution | Daou Tech vs. Dongwon System |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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