Correlation Between Dongnam Chemical and Green Cross
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Green Cross 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 Green Cross 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 Green Cross Medical, you can compare the effects of market volatilities on Dongnam Chemical and Green Cross 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 Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Green Cross.
Diversification Opportunities for Dongnam Chemical and Green Cross
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongnam and Green is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Green Cross Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Medical 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 Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Medical has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Green Cross go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Green Cross
Assuming the 90 days trading horizon Dongnam Chemical is expected to generate 1.72 times less return on investment than Green Cross. But when comparing it to its historical volatility, Dongnam Chemical Co is 13.27 times less risky than Green Cross. It trades about 0.28 of its potential returns per unit of risk. Green Cross Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 372,500 in Green Cross Medical on November 4, 2024 and sell it today you would earn a total of 4,500 from holding Green Cross Medical or generate 1.21% 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. Green Cross Medical
Performance |
| Timeline |
| Dongnam Chemical |
| Green Cross Medical |
Dongnam Chemical and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Green Cross
The main advantage of trading using opposite Dongnam Chemical and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.| Dongnam Chemical vs. Duksan Hi Metal | Dongnam Chemical vs. Foodnamoo | Dongnam Chemical vs. ABOV Semiconductor Co | Dongnam Chemical vs. Shinhan Inverse Copper |
| Green Cross vs. Samsung Electronics Co | Green Cross vs. Samsung Electronics Co | Green Cross vs. KB Financial Group | Green Cross vs. Shinhan 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |