Correlation Between Dongnam Chemical and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Dongnam Chemical and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Iljin Display.
Diversification Opportunities for Dongnam Chemical and Iljin Display
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongnam and Iljin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Iljin Display go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Iljin Display
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.7 times more return on investment than Iljin Display. However, Dongnam Chemical Co is 1.42 times less risky than Iljin Display. It trades about 0.28 of its potential returns per unit of risk. Iljin Display is currently generating about 0.05 per unit of risk. If you would invest 2,913,678 in Dongnam Chemical Co on October 30, 2024 and sell it today you would earn a total of 491,322 from holding Dongnam Chemical Co or generate 16.86% 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. Iljin Display
Performance |
| Timeline |
| Dongnam Chemical |
| Iljin Display |
Dongnam Chemical and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Iljin Display
The main advantage of trading using opposite Dongnam Chemical and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Dongnam Chemical vs. TJ media Co | Dongnam Chemical vs. Dongil Metal Co | Dongnam Chemical vs. Digital Multimedia Technology | Dongnam Chemical vs. SKONEC Entertainment Co |
| Iljin Display vs. Daishin Information Communications | Iljin Display vs. Mobileleader CoLtd | Iljin Display vs. Jeong Moon Information | Iljin Display vs. Mgame Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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