Correlation Between ABCO Electronics and Dong A
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Dong A 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 ABCO Electronics and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and Dong A Steel Technology, you can compare the effects of market volatilities on ABCO Electronics and Dong A 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 ABCO Electronics with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Dong A.
Diversification Opportunities for ABCO Electronics and Dong A
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABCO and Dong is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Dong A go up and down completely randomly.
Pair Corralation between ABCO Electronics and Dong A
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 1.67 times more return on investment than Dong A. However, ABCO Electronics is 1.67 times more volatile than Dong A Steel Technology. It trades about 0.42 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about 0.35 per unit of risk. If you would invest 461,000 in ABCO Electronics Co on October 24, 2024 and sell it today you would earn a total of 107,000 from holding ABCO Electronics Co or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. Dong A Steel Technology
Performance |
| Timeline |
| ABCO Electronics |
| Dong A Steel |
ABCO Electronics and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Dong A
The main advantage of trading using opposite ABCO Electronics and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| ABCO Electronics vs. Daishin Balance No8 | ABCO Electronics vs. NAU IB Capital | ABCO Electronics vs. Daishin Balance No | ABCO Electronics vs. Daesung Private Equity |
| Dong A vs. Ssangyong Information Communication | Dong A vs. Iljin Display | Dong A vs. ABCO Electronics Co | Dong A vs. Nable Communications |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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