Correlation Between Dongnam Chemical and RFTech
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and RFTech 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 RFTech 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 RFTech Co, you can compare the effects of market volatilities on Dongnam Chemical and RFTech 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 RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and RFTech.
Diversification Opportunities for Dongnam Chemical and RFTech
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongnam and RFTech is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and RFTech go up and down completely randomly.
Pair Corralation between Dongnam Chemical and RFTech
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Dongnam Chemical Co is 2.17 times less risky than RFTech. The stock trades about -0.23 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 302,500 in RFTech Co on September 3, 2024 and sell it today you would earn a total of 40,500 from holding RFTech Co or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. RFTech Co
Performance |
| Timeline |
| Dongnam Chemical |
| RFTech |
Dongnam Chemical and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and RFTech
The main advantage of trading using opposite Dongnam Chemical and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.| Dongnam Chemical vs. BNK Financial Group | Dongnam Chemical vs. FNSTech Co | Dongnam Chemical vs. Shinhan Financial Group | Dongnam Chemical vs. Korea Shipbuilding Offshore |
| RFTech vs. Lake Materials Co | RFTech vs. LS Materials | RFTech vs. Hana Materials | RFTech vs. Infinitt Healthcare Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |