Correlation Between Iljin Materials and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and Dongwon Metal 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 Iljin Materials and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Dongwon Metal Co, you can compare the effects of market volatilities on Iljin Materials and Dongwon Metal 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 Iljin Materials with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Dongwon Metal.
Diversification Opportunities for Iljin Materials and Dongwon Metal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iljin and Dongwon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of Iljin Materials i.e., Iljin Materials and Dongwon Metal go up and down completely randomly.
Pair Corralation between Iljin Materials and Dongwon Metal
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Dongwon Metal. In addition to that, Iljin Materials is 2.04 times more volatile than Dongwon Metal Co. It trades about -0.14 of its total potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.28 per unit of volatility. If you would invest 148,100 in Dongwon Metal Co on August 25, 2024 and sell it today you would lose (36,100) from holding Dongwon Metal Co or give up 24.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Iljin Materials Co vs. Dongwon Metal Co
Performance |
| Timeline |
| Iljin Materials |
| Dongwon Metal |
Iljin Materials and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and Dongwon Metal
The main advantage of trading using opposite Iljin Materials and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
| Dongwon Metal vs. NewFlex Technology Co | Dongwon Metal vs. Daou Technology | Dongwon Metal vs. KB Financial Group | Dongwon Metal vs. Konan Technology |
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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