Correlation Between Dongwon System and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dongwon System and Jeju Semiconductor 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 Jeju Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and Jeju Semiconductor Corp, you can compare the effects of market volatilities on Dongwon System and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Jeju Semiconductor.
Diversification Opportunities for Dongwon System and Jeju Semiconductor
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongwon and Jeju is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Dongwon System i.e., Dongwon System and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Dongwon System and Jeju Semiconductor
Assuming the 90 days trading horizon Dongwon System is expected to generate 1.04 times more return on investment than Jeju Semiconductor. However, Dongwon System is 1.04 times more volatile than Jeju Semiconductor Corp. It trades about -0.12 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.17 per unit of risk. If you would invest 4,690,000 in Dongwon System on September 13, 2024 and sell it today you would lose (440,000) from holding Dongwon System or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. Jeju Semiconductor Corp
Performance |
| Timeline |
| Dongwon System |
| Jeju Semiconductor Corp |
Dongwon System and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and Jeju Semiconductor
The main advantage of trading using opposite Dongwon System and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor'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 |
| Jeju Semiconductor vs. Cube Entertainment | Jeju Semiconductor vs. Dreamus Company | Jeju Semiconductor vs. LG Energy Solution | Jeju Semiconductor 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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