Correlation Between Korea New and Dawonsys CoLtd
Can any of the company-specific risk be diversified away by investing in both Korea New and Dawonsys CoLtd 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 Korea New and Dawonsys CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Dawonsys CoLtd, you can compare the effects of market volatilities on Korea New and Dawonsys CoLtd 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 Korea New with a short position of Dawonsys CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Dawonsys CoLtd.
Diversification Opportunities for Korea New and Dawonsys CoLtd
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Korea and Dawonsys is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Dawonsys CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawonsys CoLtd and Korea New 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 Korea New Network are associated (or correlated) with Dawonsys CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawonsys CoLtd has no effect on the direction of Korea New i.e., Korea New and Dawonsys CoLtd go up and down completely randomly.
Pair Corralation between Korea New and Dawonsys CoLtd
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Dawonsys CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 1.24 times less risky than Dawonsys CoLtd. The stock trades about -0.08 of its potential returns per unit of risk. The Dawonsys CoLtd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,360,009 in Dawonsys CoLtd on September 4, 2024 and sell it today you would lose (343,009) from holding Dawonsys CoLtd or give up 25.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Korea New Network vs. Dawonsys CoLtd
Performance |
| Timeline |
| Korea New Network |
| Dawonsys CoLtd |
Korea New and Dawonsys CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Dawonsys CoLtd
The main advantage of trading using opposite Korea New and Dawonsys CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Dawonsys CoLtd 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 Dawonsys CoLtd will offset losses from the drop in Dawonsys CoLtd's long position.| Korea New vs. Kukdo Chemical Co | Korea New vs. Ssangyong Materials Corp | Korea New vs. SH Energy Chemical | Korea New vs. EV Advanced Material |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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