Correlation Between Dongwon System and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Dongwon System and Nable Communications 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 Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and Nable Communications, you can compare the effects of market volatilities on Dongwon System and Nable Communications 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 Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Nable Communications.
Diversification Opportunities for Dongwon System and Nable Communications
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongwon and Nable is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Dongwon System i.e., Dongwon System and Nable Communications go up and down completely randomly.
Pair Corralation between Dongwon System and Nable Communications
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Nable Communications. In addition to that, Dongwon System is 2.11 times more volatile than Nable Communications. It trades about -0.12 of its total potential returns per unit of risk. Nable Communications is currently generating about 0.32 per unit of volatility. If you would invest 617,000 in Nable Communications on September 13, 2024 and sell it today you would earn a total of 71,000 from holding Nable Communications or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. Nable Communications
Performance |
| Timeline |
| Dongwon System |
| Nable Communications |
Dongwon System and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and Nable Communications
The main advantage of trading using opposite Dongwon System and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' 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 |
| Nable Communications vs. Cube Entertainment | Nable Communications vs. Dreamus Company | Nable Communications vs. LG Energy Solution | Nable Communications 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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