Correlation Between Dongwon Metal and Innowireless
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on Dongwon Metal and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Innowireless.
Diversification Opportunities for Dongwon Metal and Innowireless
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongwon and Innowireless is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Innowireless go up and down completely randomly.
Pair Corralation between Dongwon Metal and Innowireless
Assuming the 90 days trading horizon Dongwon Metal Co is expected to generate 1.51 times more return on investment than Innowireless. However, Dongwon Metal is 1.51 times more volatile than Innowireless Co. It trades about 0.02 of its potential returns per unit of risk. Innowireless Co is currently generating about -0.02 per unit of risk. If you would invest 161,844 in Dongwon Metal Co on September 14, 2024 and sell it today you would earn a total of 1,956 from holding Dongwon Metal Co or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.68% |
| Values | Daily Returns |
Dongwon Metal Co vs. Innowireless Co
Performance |
| Timeline |
| Dongwon Metal |
| Innowireless |
Dongwon Metal and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Innowireless
The main advantage of trading using opposite Dongwon Metal and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. SK Hynix | Dongwon Metal vs. POSCO Holdings |
| Innowireless vs. CJ Seafood Corp | Innowireless vs. Heungkuk Metaltech CoLtd | Innowireless vs. Dongwon Metal Co | Innowireless vs. Youngsin Metal Industrial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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