Correlation Between Dongwon System and KHVATEC CoLtd
Can any of the company-specific risk be diversified away by investing in both Dongwon System and KHVATEC CoLtd 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 KHVATEC CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and KHVATEC CoLtd, you can compare the effects of market volatilities on Dongwon System and KHVATEC CoLtd 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 KHVATEC CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and KHVATEC CoLtd.
Diversification Opportunities for Dongwon System and KHVATEC CoLtd
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongwon and KHVATEC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd 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 KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of Dongwon System i.e., Dongwon System and KHVATEC CoLtd go up and down completely randomly.
Pair Corralation between Dongwon System and KHVATEC CoLtd
Assuming the 90 days trading horizon Dongwon System is expected to generate 1.22 times more return on investment than KHVATEC CoLtd. However, Dongwon System is 1.22 times more volatile than KHVATEC CoLtd. It trades about -0.02 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about -0.12 per unit of risk. If you would invest 4,415,000 in Dongwon System on September 14, 2024 and sell it today you would lose (105,000) from holding Dongwon System or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. KHVATEC CoLtd
Performance |
| Timeline |
| Dongwon System |
| KHVATEC CoLtd |
Dongwon System and KHVATEC CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and KHVATEC CoLtd
The main advantage of trading using opposite Dongwon System and KHVATEC CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, KHVATEC CoLtd 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 KHVATEC CoLtd will offset losses from the drop in KHVATEC CoLtd's long position.| Dongwon System vs. DSC Investment | Dongwon System vs. Jeju Air Co | Dongwon System vs. Woori Technology Investment | Dongwon System vs. CU Medical Systems |
| KHVATEC CoLtd vs. Seoul Semiconductor Co | KHVATEC CoLtd vs. Interflex Co | KHVATEC CoLtd vs. Intops Co | KHVATEC CoLtd vs. Kmw Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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