Correlation Between Iljin Display and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Iljin Display and Dongnam Chemical 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 Display and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Dongnam Chemical Co, you can compare the effects of market volatilities on Iljin Display and Dongnam Chemical 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 Display with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Dongnam Chemical.
Diversification Opportunities for Iljin Display and Dongnam Chemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iljin and Dongnam is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Iljin Display 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 Display are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Iljin Display i.e., Iljin Display and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Iljin Display and Dongnam Chemical
Assuming the 90 days trading horizon Iljin Display is expected to generate 5.19 times more return on investment than Dongnam Chemical. However, Iljin Display is 5.19 times more volatile than Dongnam Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about 0.19 per unit of risk. If you would invest 86,500 in Iljin Display on November 6, 2024 and sell it today you would earn a total of 1,800 from holding Iljin Display or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Display vs. Dongnam Chemical Co
Performance |
| Timeline |
| Iljin Display |
| Dongnam Chemical |
Iljin Display and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and Dongnam Chemical
The main advantage of trading using opposite Iljin Display and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Iljin Display vs. INFINITT Healthcare Co | Iljin Display vs. NewFlex Technology Co | Iljin Display vs. LG Household Healthcare | Iljin Display vs. Youngsin Metal Industrial |
| Dongnam Chemical vs. Dongkuk Structures Construction | Dongnam Chemical vs. Automobile Pc | Dongnam Chemical vs. GS Engineering Construction | Dongnam Chemical vs. Homecast CoLtd |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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