Correlation Between Daewon Chemical and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Daewon Chemical and Dongnam 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 Daewon Chemical and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Chemical Co and Dongnam Chemical Co, you can compare the effects of market volatilities on Daewon Chemical and Dongnam 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 Daewon Chemical with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Chemical and Dongnam Chemical.
Diversification Opportunities for Daewon Chemical and Dongnam Chemical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewon and Dongnam is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Chemical Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Daewon 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 Daewon Chemical Co are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Daewon Chemical i.e., Daewon Chemical and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Daewon Chemical and Dongnam Chemical
Assuming the 90 days trading horizon Daewon Chemical Co is expected to under-perform the Dongnam Chemical. In addition to that, Daewon Chemical is 2.82 times more volatile than Dongnam Chemical Co. It trades about -0.06 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about 0.05 per unit of volatility. If you would invest 3,165,950 in Dongnam Chemical Co on October 26, 2024 and sell it today you would earn a total of 234,050 from holding Dongnam Chemical Co or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Chemical Co vs. Dongnam Chemical Co
Performance |
| Timeline |
| Daewon Chemical |
| Dongnam Chemical |
Daewon Chemical and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Chemical and Dongnam Chemical
The main advantage of trading using opposite Daewon Chemical and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Chemical position performs unexpectedly, Dongnam 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Daewon Chemical vs. SAMG Entertainment Co | Daewon Chemical vs. Daewon Media Co | Daewon Chemical vs. MEDIANA CoLtd | Daewon Chemical vs. Playgram Co |
| Dongnam Chemical vs. KB Financial Group | Dongnam Chemical vs. Shinhan Financial Group | Dongnam Chemical vs. Hana Financial | Dongnam Chemical vs. Woori 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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