Correlation Between InfoBank and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both InfoBank 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 InfoBank and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and Dongwon Metal Co, you can compare the effects of market volatilities on InfoBank 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 InfoBank with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and Dongwon Metal.
Diversification Opportunities for InfoBank and Dongwon Metal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between InfoBank and Dongwon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and InfoBank 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 InfoBank 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 InfoBank i.e., InfoBank and Dongwon Metal go up and down completely randomly.
Pair Corralation between InfoBank and Dongwon Metal
Assuming the 90 days trading horizon InfoBank is expected to generate 2.54 times less return on investment than Dongwon Metal. But when comparing it to its historical volatility, InfoBank is 1.49 times less risky than Dongwon Metal. It trades about 0.13 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 119,000 in Dongwon Metal Co on September 13, 2024 and sell it today you would earn a total of 54,000 from holding Dongwon Metal Co or generate 45.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. Dongwon Metal Co
Performance |
| Timeline |
| InfoBank |
| Dongwon Metal |
InfoBank and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and Dongwon Metal
The main advantage of trading using opposite InfoBank and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank 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.| InfoBank vs. Cube Entertainment | InfoBank vs. Dreamus Company | InfoBank vs. LG Energy Solution | InfoBank vs. Dongwon System |
| Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. SK Hynix | Dongwon Metal vs. POSCO Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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