Correlation Between Dongwon Metal and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Seoul Semiconductor 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 Semiconductor 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 Semiconductor Co, you can compare the effects of market volatilities on Dongwon Metal and Seoul Semiconductor 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 Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Seoul Semiconductor.
Diversification Opportunities for Dongwon Metal and Seoul Semiconductor
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwon and Seoul is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor 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 Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Semiconductor has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between Dongwon Metal and Seoul Semiconductor
Assuming the 90 days trading horizon Dongwon Metal Co is expected to generate 1.62 times more return on investment than Seoul Semiconductor. However, Dongwon Metal is 1.62 times more volatile than Seoul Semiconductor Co. It trades about 0.02 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.02 per unit of risk. If you would invest 103,321 in Dongwon Metal Co on August 25, 2024 and sell it today you would earn a total of 8,679 from holding Dongwon Metal Co or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon Metal Co vs. Seoul Semiconductor Co
Performance |
| Timeline |
| Dongwon Metal |
| Seoul Semiconductor |
Dongwon Metal and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Seoul Semiconductor
The main advantage of trading using opposite Dongwon Metal and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Seoul Semiconductor 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 Semiconductor will offset losses from the drop in Seoul Semiconductor's long position.| Dongwon Metal vs. NewFlex Technology Co | Dongwon Metal vs. Daou Technology | Dongwon Metal vs. KB Financial Group | Dongwon Metal vs. Konan Technology |
| Seoul Semiconductor vs. Korea Real Estate | Seoul Semiconductor vs. Korea Ratings Co | Seoul Semiconductor vs. IQuest Co | Seoul Semiconductor vs. Wonbang Tech Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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