Correlation Between Dongwon Metal and Chunbo
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Chunbo 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 Chunbo 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 Chunbo Co, you can compare the effects of market volatilities on Dongwon Metal and Chunbo 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 Chunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Chunbo.
Diversification Opportunities for Dongwon Metal and Chunbo
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwon and Chunbo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Chunbo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunbo 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 Chunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunbo has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Chunbo go up and down completely randomly.
Pair Corralation between Dongwon Metal and Chunbo
Assuming the 90 days trading horizon Dongwon Metal Co is expected to generate 0.46 times more return on investment than Chunbo. However, Dongwon Metal Co is 2.17 times less risky than Chunbo. It trades about -0.14 of its potential returns per unit of risk. Chunbo Co is currently generating about -0.25 per unit of risk. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon Metal Co vs. Chunbo Co
Performance |
| Timeline |
| Dongwon Metal |
| Chunbo |
Dongwon Metal and Chunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Chunbo
The main advantage of trading using opposite Dongwon Metal and Chunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Chunbo 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 Chunbo will offset losses from the drop in Chunbo's long position.| Dongwon Metal vs. AptaBio Therapeutics | Dongwon Metal vs. Daewoo SBI SPAC | Dongwon Metal vs. Dream Security co | Dongwon Metal vs. Microfriend |
| Chunbo vs. Samlip General Foods | Chunbo vs. Hyundai Home Shopping | Chunbo vs. Sempio Foods Co | Chunbo vs. Digital Power Communications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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