Correlation Between Dongnam Chemical and Daishin Balance
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Daishin Balance 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 Daishin Balance 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 Daishin Balance No8, you can compare the effects of market volatilities on Dongnam Chemical and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Daishin Balance.
Diversification Opportunities for Dongnam Chemical and Daishin Balance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongnam and Daishin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Daishin Balance go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Daishin Balance
Assuming the 90 days trading horizon Dongnam Chemical is expected to generate 6.99 times less return on investment than Daishin Balance. But when comparing it to its historical volatility, Dongnam Chemical Co is 6.5 times less risky than Daishin Balance. It trades about 0.11 of its potential returns per unit of risk. Daishin Balance No8 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 530,000 in Daishin Balance No8 on November 7, 2024 and sell it today you would earn a total of 23,000 from holding Daishin Balance No8 or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Dongnam Chemical Co vs. Daishin Balance No8
Performance |
| Timeline |
| Dongnam Chemical |
| Daishin Balance No8 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Dongnam Chemical and Daishin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Daishin Balance
The main advantage of trading using opposite Dongnam Chemical and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.| Dongnam Chemical vs. Dongbang Transport Logistics | Dongnam Chemical vs. Hanwha Chemical Corp | Dongnam Chemical vs. Aekyung Petrochemical Co | Dongnam Chemical vs. Samick Musical Instruments |
| Daishin Balance vs. Samsung Life Insurance | Daishin Balance vs. Woori Technology | Daishin Balance vs. Settlebank | Daishin Balance vs. AeroSpace Technology of |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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