Correlation Between Dongnam Chemical and JC Chemical
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and JC 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 Dongnam Chemical and JC Chemical 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 JC Chemical Co, you can compare the effects of market volatilities on Dongnam Chemical and JC 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 Dongnam Chemical with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and JC Chemical.
Diversification Opportunities for Dongnam Chemical and JC Chemical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongnam and 137950 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical 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 JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and JC Chemical go up and down completely randomly.
Pair Corralation between Dongnam Chemical and JC Chemical
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.22 times more return on investment than JC Chemical. However, Dongnam Chemical Co is 4.54 times less risky than JC Chemical. It trades about -0.23 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.16 per unit of risk. If you would invest 3,095,000 in Dongnam Chemical Co on September 3, 2024 and sell it today you would lose (135,000) from holding Dongnam Chemical Co or give up 4.36% 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. JC Chemical Co
Performance |
| Timeline |
| Dongnam Chemical |
| JC Chemical |
Dongnam Chemical and JC Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and JC Chemical
The main advantage of trading using opposite Dongnam Chemical and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, JC 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 JC Chemical will offset losses from the drop in JC Chemical'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 |
| JC Chemical vs. Busan Industrial Co | JC Chemical vs. UNISEM Co | JC Chemical vs. RPBio Inc | JC Chemical vs. Finebesteel |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |