Correlation Between Dongwon Metal and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Seoul Food 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 Seoul Food 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 Seoul Food Industrial, you can compare the effects of market volatilities on Dongwon Metal and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Seoul Food.
Diversification Opportunities for Dongwon Metal and Seoul Food
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongwon and Seoul is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food 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 Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Seoul Food go up and down completely randomly.
Pair Corralation between Dongwon Metal and Seoul Food
Assuming the 90 days trading horizon Dongwon Metal Co is expected to generate 2.45 times more return on investment than Seoul Food. However, Dongwon Metal is 2.45 times more volatile than Seoul Food Industrial. It trades about 0.03 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.04 per unit of risk. If you would invest 96,179 in Dongwon Metal Co on August 29, 2024 and sell it today you would earn a total of 17,321 from holding Dongwon Metal Co or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon Metal Co vs. Seoul Food Industrial
Performance |
| Timeline |
| Dongwon Metal |
| Seoul Food Industrial |
Dongwon Metal and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Seoul Food
The main advantage of trading using opposite Dongwon Metal and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Dongwon Metal vs. ABOV Semiconductor Co | Dongwon Metal vs. DataSolution | Dongwon Metal vs. Ssangyong Information Communication | Dongwon Metal vs. Nable Communications |
| Seoul Food vs. AptaBio Therapeutics | Seoul Food vs. Daewoo SBI SPAC | Seoul Food vs. Dream Security co | Seoul Food 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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