Correlation Between SFA Semicon and Dongjin Semichem
Can any of the company-specific risk be diversified away by investing in both SFA Semicon and Dongjin Semichem 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 SFA Semicon and Dongjin Semichem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Semicon Co and Dongjin Semichem Co, you can compare the effects of market volatilities on SFA Semicon and Dongjin Semichem 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 SFA Semicon with a short position of Dongjin Semichem. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Semicon and Dongjin Semichem.
Diversification Opportunities for SFA Semicon and Dongjin Semichem
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SFA and Dongjin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SFA Semicon Co and Dongjin Semichem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongjin Semichem and SFA Semicon 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 SFA Semicon Co are associated (or correlated) with Dongjin Semichem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongjin Semichem has no effect on the direction of SFA Semicon i.e., SFA Semicon and Dongjin Semichem go up and down completely randomly.
Pair Corralation between SFA Semicon and Dongjin Semichem
Assuming the 90 days trading horizon SFA Semicon Co is expected to under-perform the Dongjin Semichem. But the stock apears to be less risky and, when comparing its historical volatility, SFA Semicon Co is 1.22 times less risky than Dongjin Semichem. The stock trades about -0.12 of its potential returns per unit of risk. The Dongjin Semichem Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,520,000 in Dongjin Semichem Co on August 25, 2024 and sell it today you would lose (1,065,000) from holding Dongjin Semichem Co or give up 30.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Semicon Co vs. Dongjin Semichem Co
Performance |
| Timeline |
| SFA Semicon |
| Dongjin Semichem |
SFA Semicon and Dongjin Semichem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Semicon and Dongjin Semichem
The main advantage of trading using opposite SFA Semicon and Dongjin Semichem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Semicon position performs unexpectedly, Dongjin Semichem 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 Dongjin Semichem will offset losses from the drop in Dongjin Semichem's long position.| SFA Semicon vs. Korea Real Estate | SFA Semicon vs. Korea Ratings Co | SFA Semicon vs. IQuest Co | SFA Semicon vs. Wonbang Tech Co |
| Dongjin Semichem vs. LG Chemicals | Dongjin Semichem vs. POSCO Holdings | Dongjin Semichem vs. Lotte Chemical Corp | Dongjin Semichem vs. Hyundai Steel |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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