Correlation Between Dongsin Engineering and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Dongsin Engineering and INNOX Advanced 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 INNOX Advanced 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 INNOX Advanced Materials, you can compare the effects of market volatilities on Dongsin Engineering and INNOX Advanced 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongsin Engineering and INNOX Advanced.
Diversification Opportunities for Dongsin Engineering and INNOX Advanced
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dongsin and INNOX is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dongsin Engineering Constructi and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Dongsin Engineering i.e., Dongsin Engineering and INNOX Advanced go up and down completely randomly.
Pair Corralation between Dongsin Engineering and INNOX Advanced
Assuming the 90 days trading horizon Dongsin Engineering Construction is expected to generate 4.21 times more return on investment than INNOX Advanced. However, Dongsin Engineering is 4.21 times more volatile than INNOX Advanced Materials. It trades about -0.01 of its potential returns per unit of risk. INNOX Advanced Materials is currently generating about -0.16 per unit of risk. If you would invest 2,100,000 in Dongsin Engineering Construction on August 31, 2024 and sell it today you would lose (220,000) from holding Dongsin Engineering Construction or give up 10.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongsin Engineering Constructi vs. INNOX Advanced Materials
Performance |
| Timeline |
| Dongsin Engineering |
| INNOX Advanced Materials |
Dongsin Engineering and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongsin Engineering and INNOX Advanced
The main advantage of trading using opposite Dongsin Engineering and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongsin Engineering position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Dongsin Engineering vs. Busan Industrial Co | Dongsin Engineering vs. Busan Ind | Dongsin Engineering vs. Mirae Asset Daewoo | Dongsin Engineering vs. Finebesteel |
| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. LX Semicon Co | INNOX Advanced vs. Tokai Carbon Korea | INNOX Advanced vs. People 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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