Correlation Between Dongwon Metal and Kakao Games
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Kakao Games 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 Kakao Games 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 Kakao Games Corp, you can compare the effects of market volatilities on Dongwon Metal and Kakao Games 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 Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Kakao Games.
Diversification Opportunities for Dongwon Metal and Kakao Games
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwon and Kakao is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp 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 Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Kakao Games go up and down completely randomly.
Pair Corralation between Dongwon Metal and Kakao Games
Assuming the 90 days trading horizon Dongwon Metal Co is expected to under-perform the Kakao Games. But the stock apears to be less risky and, when comparing its historical volatility, Dongwon Metal Co is 1.46 times less risky than Kakao Games. The stock trades about -0.28 of its potential returns per unit of risk. The Kakao Games Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,791,000 in Kakao Games Corp on August 28, 2024 and sell it today you would lose (73,000) from holding Kakao Games Corp or give up 4.08% 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. Kakao Games Corp
Performance |
| Timeline |
| Dongwon Metal |
| Kakao Games Corp |
Dongwon Metal and Kakao Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Kakao Games
The main advantage of trading using opposite Dongwon Metal and Kakao Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Kakao Games 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 Kakao Games will offset losses from the drop in Kakao Games' long position.| Dongwon Metal vs. Automobile Pc | Dongwon Metal vs. KB Financial Group | Dongwon Metal vs. Koryo Credit Information | Dongwon Metal vs. Samsung Life Insurance |
| Kakao Games vs. Posco ICT | Kakao Games vs. Devsisters corporation | Kakao Games vs. Nice Information Telecommunication | Kakao Games vs. InfoBank |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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