Correlation Between Dongwon Metal and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Kumho Industrial 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 Metal and Kumho Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon Metal Co and Kumho Industrial Co, you can compare the effects of market volatilities on Dongwon Metal and Kumho Industrial 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 Metal with a short position of Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Kumho Industrial.
Diversification Opportunities for Dongwon Metal and Kumho Industrial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwon and Kumho is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial and Dongwon Metal 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 Metal Co are associated (or correlated) with Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Kumho Industrial go up and down completely randomly.
Pair Corralation between Dongwon Metal and Kumho Industrial
Assuming the 90 days trading horizon Dongwon Metal Co is expected to generate 1.29 times more return on investment than Kumho Industrial. However, Dongwon Metal is 1.29 times more volatile than Kumho Industrial Co. It trades about -0.06 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.14 per unit of risk. If you would invest 161,649 in Dongwon Metal Co on September 4, 2024 and sell it today you would lose (52,649) from holding Dongwon Metal Co or give up 32.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon Metal Co vs. Kumho Industrial Co
Performance |
| Timeline |
| Dongwon Metal |
| Kumho Industrial |
Dongwon Metal and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Kumho Industrial
The main advantage of trading using opposite Dongwon Metal and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Dongwon Metal vs. Digital Multimedia Technology | Dongwon Metal vs. DC Media Co | Dongwon Metal vs. JYP Entertainment Corp | Dongwon Metal vs. Kyeryong Construction Industrial |
| Kumho Industrial vs. AptaBio Therapeutics | Kumho Industrial vs. Daewoo SBI SPAC | Kumho Industrial vs. Dream Security co | Kumho Industrial vs. Microfriend |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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