Correlation Between Dongnam Chemical and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor Co, you can compare the effects of market volatilities on Dongnam Chemical and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and ABOV Semiconductor.
Diversification Opportunities for Dongnam Chemical and ABOV Semiconductor
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongnam and ABOV is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between Dongnam Chemical and ABOV Semiconductor
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.6 times more return on investment than ABOV Semiconductor. However, Dongnam Chemical Co is 1.67 times less risky than ABOV Semiconductor. It trades about -0.25 of its potential returns per unit of risk. ABOV Semiconductor Co is currently generating about -0.3 per unit of risk. If you would invest 3,285,000 in Dongnam Chemical Co on August 31, 2024 and sell it today you would lose (295,000) from holding Dongnam Chemical Co or give up 8.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. ABOV Semiconductor Co
Performance |
| Timeline |
| Dongnam Chemical |
| ABOV Semiconductor |
Dongnam Chemical and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and ABOV Semiconductor
The main advantage of trading using opposite Dongnam Chemical and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.| Dongnam Chemical vs. AptaBio Therapeutics | Dongnam Chemical vs. Daewoo SBI SPAC | Dongnam Chemical vs. Dream Security co | Dongnam Chemical vs. Microfriend |
| ABOV Semiconductor vs. Dongsin Engineering Construction | ABOV Semiconductor vs. Doosan Fuel Cell | ABOV Semiconductor vs. Daishin Balance 1 | ABOV Semiconductor vs. Total Soft Bank |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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