Correlation Between Dongwon System and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Dongwon System and Hana Financial 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 Hana Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and Hana Financial, you can compare the effects of market volatilities on Dongwon System and Hana Financial 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 Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Hana Financial.
Diversification Opportunities for Dongwon System and Hana Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongwon and Hana is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 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 Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Dongwon System i.e., Dongwon System and Hana Financial go up and down completely randomly.
Pair Corralation between Dongwon System and Hana Financial
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Hana Financial. In addition to that, Dongwon System is 1.46 times more volatile than Hana Financial. It trades about -0.13 of its total potential returns per unit of risk. Hana Financial is currently generating about -0.05 per unit of volatility. If you would invest 6,540,000 in Hana Financial on August 29, 2024 and sell it today you would lose (150,000) from holding Hana Financial or give up 2.29% 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. Hana Financial
Performance |
| Timeline |
| Dongwon System |
| Hana Financial |
Dongwon System and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and Hana Financial
The main advantage of trading using opposite Dongwon System and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's long position.| Dongwon System vs. LG Chemicals | Dongwon System vs. POSCO Holdings | Dongwon System vs. Hanwha Solutions | Dongwon System vs. Lotte Chemical Corp |
| Hana Financial vs. Cube Entertainment | Hana Financial vs. Dreamus Company | Hana Financial vs. LG Energy Solution | Hana Financial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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