Correlation Between Choil Aluminum and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Dongwon Metal 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 Choil Aluminum and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Dongwon Metal Co, you can compare the effects of market volatilities on Choil Aluminum and Dongwon Metal 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 Choil Aluminum with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Dongwon Metal.
Diversification Opportunities for Choil Aluminum and Dongwon Metal
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choil and Dongwon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Dongwon Metal go up and down completely randomly.
Pair Corralation between Choil Aluminum and Dongwon Metal
Assuming the 90 days trading horizon Choil Aluminum is expected to under-perform the Dongwon Metal. In addition to that, Choil Aluminum is 1.12 times more volatile than Dongwon Metal Co. It trades about -0.14 of its total potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.14 per unit of volatility. If you would invest 122,700 in Dongwon Metal Co on August 28, 2024 and sell it today you would lose (8,400) from holding Dongwon Metal Co or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Dongwon Metal Co
Performance |
| Timeline |
| Choil Aluminum |
| Dongwon Metal |
Choil Aluminum and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Dongwon Metal
The main advantage of trading using opposite Choil Aluminum and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| Choil Aluminum vs. Hankuk Steel Wire | Choil Aluminum vs. Cuckoo Homesys Co | Choil Aluminum vs. Kukdong Oil Chemicals | Choil Aluminum vs. Hanil Iron Steel |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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