Correlation Between TJ Media and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both TJ Media and Dongwon Metal 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 TJ Media and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TJ media Co and Dongwon Metal Co, you can compare the effects of market volatilities on TJ Media and Dongwon Metal 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 TJ Media with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TJ Media and Dongwon Metal.
Diversification Opportunities for TJ Media and Dongwon Metal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 032540 and Dongwon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TJ media Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and TJ Media 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 TJ media Co are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of TJ Media i.e., TJ Media and Dongwon Metal go up and down completely randomly.
Pair Corralation between TJ Media and Dongwon Metal
Assuming the 90 days trading horizon TJ media Co is expected to generate 0.68 times more return on investment than Dongwon Metal. However, TJ media Co is 1.46 times less risky than Dongwon Metal. It trades about -0.2 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.26 per unit of risk. If you would invest 540,000 in TJ media Co on September 3, 2024 and sell it today you would lose (69,500) from holding TJ media Co or give up 12.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TJ media Co vs. Dongwon Metal Co
Performance |
| Timeline |
| TJ media |
| Dongwon Metal |
TJ Media and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TJ Media and Dongwon Metal
The main advantage of trading using opposite TJ Media and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TJ Media position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| TJ Media vs. Wave Electronics Co | TJ Media vs. Fine Besteel Co | TJ Media vs. Anam Electronics Co | TJ Media vs. Dongbu Steel Co |
| Dongwon Metal vs. HB Technology TD | Dongwon Metal vs. Hwangkum Steel Technology | Dongwon Metal vs. JYP Entertainment Corp | Dongwon Metal vs. TJ media Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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