Correlation Between Wonbang Tech and Dong A
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech 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 Wonbang Tech and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonbang Tech Co and Dong A Steel Technology, you can compare the effects of market volatilities on Wonbang Tech 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 Wonbang Tech with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Dong A.
Diversification Opportunities for Wonbang Tech and Dong A
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wonbang and Dong is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech 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 Wonbang Tech 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 Wonbang Tech 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 Wonbang Tech i.e., Wonbang Tech and Dong A go up and down completely randomly.
Pair Corralation between Wonbang Tech and Dong A
Assuming the 90 days trading horizon Wonbang Tech Co is expected to generate 1.48 times more return on investment than Dong A. However, Wonbang Tech is 1.48 times more volatile than Dong A Steel Technology. It trades about 0.32 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about 0.22 per unit of risk. If you would invest 1,262,000 in Wonbang Tech Co on October 14, 2024 and sell it today you would earn a total of 187,000 from holding Wonbang Tech Co or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonbang Tech Co vs. Dong A Steel Technology
Performance |
| Timeline |
| Wonbang Tech |
| Dong A Steel |
Wonbang Tech and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and Dong A
The main advantage of trading using opposite Wonbang Tech and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech 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.| Wonbang Tech vs. Hwangkum Steel Technology | Wonbang Tech vs. Bosung Power Technology | Wonbang Tech vs. Puloon Technology | Wonbang Tech vs. Ilji Technology Co |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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