Correlation Between Dongsin Engineering and LEENO Industrial
Can any of the company-specific risk be diversified away by investing in both Dongsin Engineering and LEENO Industrial 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 Dongsin Engineering and LEENO Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongsin Engineering Construction and LEENO Industrial, you can compare the effects of market volatilities on Dongsin Engineering and LEENO Industrial 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 Dongsin Engineering with a short position of LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongsin Engineering and LEENO Industrial.
Diversification Opportunities for Dongsin Engineering and LEENO Industrial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongsin and LEENO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dongsin Engineering Constructi and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial and Dongsin Engineering 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 Dongsin Engineering Construction are associated (or correlated) with LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of Dongsin Engineering i.e., Dongsin Engineering and LEENO Industrial go up and down completely randomly.
Pair Corralation between Dongsin Engineering and LEENO Industrial
Assuming the 90 days trading horizon Dongsin Engineering Construction is expected to generate 3.81 times more return on investment than LEENO Industrial. However, Dongsin Engineering is 3.81 times more volatile than LEENO Industrial. It trades about 0.15 of its potential returns per unit of risk. LEENO Industrial is currently generating about 0.12 per unit of risk. If you would invest 1,992,123 in Dongsin Engineering Construction on October 26, 2024 and sell it today you would earn a total of 1,902,877 from holding Dongsin Engineering Construction or generate 95.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Dongsin Engineering Constructi vs. LEENO Industrial
Performance |
| Timeline |
| Dongsin Engineering |
| LEENO Industrial |
Dongsin Engineering and LEENO Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongsin Engineering and LEENO Industrial
The main advantage of trading using opposite Dongsin Engineering and LEENO Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongsin Engineering position performs unexpectedly, LEENO Industrial 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 LEENO Industrial will offset losses from the drop in LEENO Industrial's long position.| Dongsin Engineering vs. Samsung Publishing Co | Dongsin Engineering vs. Netmarble Games Corp | Dongsin Engineering vs. Vissem Electronics Co | Dongsin Engineering vs. Shinil Electronics Co |
| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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