Correlation Between Dongwon System and Korea Information
Can any of the company-specific risk be diversified away by investing in both Dongwon System and Korea Information 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 Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and Korea Information Engineering, you can compare the effects of market volatilities on Dongwon System and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Korea Information.
Diversification Opportunities for Dongwon System and Korea Information
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongwon and Korea is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Dongwon System i.e., Dongwon System and Korea Information go up and down completely randomly.
Pair Corralation between Dongwon System and Korea Information
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Korea Information. In addition to that, Dongwon System is 1.1 times more volatile than Korea Information Engineering. It trades about -0.12 of its total potential returns per unit of risk. Korea Information Engineering is currently generating about 0.15 per unit of volatility. If you would invest 248,000 in Korea Information Engineering on September 13, 2024 and sell it today you would earn a total of 23,000 from holding Korea Information Engineering or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. Korea Information Engineering
Performance |
| Timeline |
| Dongwon System |
| Korea Information |
Dongwon System and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and Korea Information
The main advantage of trading using opposite Dongwon System and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Dongwon System vs. ABOV Semiconductor Co | Dongwon System vs. BGF Retail Co | Dongwon System vs. Seoul Semiconductor Co | Dongwon System vs. ITM Semiconductor Co |
| Korea Information vs. Cube Entertainment | Korea Information vs. Dreamus Company | Korea Information vs. LG Energy Solution | Korea Information 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 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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