Correlation Between Aurora World and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Aurora World and Dongwoo Farm 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 Aurora World and Dongwoo Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora World and Dongwoo Farm To, you can compare the effects of market volatilities on Aurora World and Dongwoo Farm 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 Aurora World with a short position of Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora World and Dongwoo Farm.
Diversification Opportunities for Aurora World and Dongwoo Farm
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and Dongwoo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aurora World and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To and Aurora World 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 Aurora World are associated (or correlated) with Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Aurora World i.e., Aurora World and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Aurora World and Dongwoo Farm
Assuming the 90 days trading horizon Aurora World is expected to generate 1.07 times more return on investment than Dongwoo Farm. However, Aurora World is 1.07 times more volatile than Dongwoo Farm To. It trades about -0.04 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.15 per unit of risk. If you would invest 668,000 in Aurora World on September 3, 2024 and sell it today you would lose (62,000) from holding Aurora World or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora World vs. Dongwoo Farm To
Performance |
| Timeline |
| Aurora World |
| Dongwoo Farm To |
Aurora World and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora World and Dongwoo Farm
The main advantage of trading using opposite Aurora World and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora World position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Aurora World vs. Korea Real Estate | Aurora World vs. Busan Industrial Co | Aurora World vs. UNISEM Co | Aurora World vs. RPBio Inc |
| Dongwoo Farm vs. Hanjoo Light Metal | Dongwoo Farm vs. LG Chemicals | Dongwoo Farm vs. Hannong Chemicals | Dongwoo Farm vs. Kukil Metal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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