Correlation Between Dongnam Chemical and Samyang Foods
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Samyang Foods 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 Dongnam Chemical and Samyang Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and Samyang Foods Co, you can compare the effects of market volatilities on Dongnam Chemical and Samyang Foods 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 Dongnam Chemical with a short position of Samyang Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Samyang Foods.
Diversification Opportunities for Dongnam Chemical and Samyang Foods
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongnam and Samyang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and Dongnam Chemical 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 Dongnam Chemical Co are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Samyang Foods go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Samyang Foods
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.57 times more return on investment than Samyang Foods. However, Dongnam Chemical Co is 1.76 times less risky than Samyang Foods. It trades about 0.4 of its potential returns per unit of risk. Samyang Foods Co is currently generating about -0.23 per unit of risk. If you would invest 3,145,000 in Dongnam Chemical Co on October 25, 2024 and sell it today you would earn a total of 265,000 from holding Dongnam Chemical Co or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. Samyang Foods Co
Performance |
| Timeline |
| Dongnam Chemical |
| Samyang Foods |
Dongnam Chemical and Samyang Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Samyang Foods
The main advantage of trading using opposite Dongnam Chemical and Samyang Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Samyang Foods 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 Samyang Foods will offset losses from the drop in Samyang Foods' long position.| Dongnam Chemical vs. KB Financial Group | Dongnam Chemical vs. Shinhan Financial Group | Dongnam Chemical vs. Hana Financial | Dongnam Chemical vs. Woori Financial Group |
| Samyang Foods vs. KB Financial Group | Samyang Foods vs. Shinhan Financial Group | Samyang Foods vs. Hana Financial | Samyang Foods vs. Woori Financial Group |
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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