Correlation Between Mgame Corp and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Mgame Corp and Dongnam Chemical 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 Mgame Corp and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mgame Corp and Dongnam Chemical Co, you can compare the effects of market volatilities on Mgame Corp and Dongnam Chemical 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 Mgame Corp with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mgame Corp and Dongnam Chemical.
Diversification Opportunities for Mgame Corp and Dongnam Chemical
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mgame and Dongnam is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mgame Corp and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Mgame Corp 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 Mgame Corp are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Mgame Corp i.e., Mgame Corp and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Mgame Corp and Dongnam Chemical
Assuming the 90 days trading horizon Mgame Corp is expected to generate 1.9 times more return on investment than Dongnam Chemical. However, Mgame Corp is 1.9 times more volatile than Dongnam Chemical Co. It trades about -0.03 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 796,420 in Mgame Corp on November 9, 2024 and sell it today you would lose (287,420) from holding Mgame Corp or give up 36.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mgame Corp vs. Dongnam Chemical Co
Performance |
| Timeline |
| Mgame Corp |
| Dongnam Chemical |
Mgame Corp and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mgame Corp and Dongnam Chemical
The main advantage of trading using opposite Mgame Corp and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mgame Corp position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Mgame Corp vs. Lotte Fine Chemical | Mgame Corp vs. Dongwoon Anatech Co | Mgame Corp vs. Vitzro Tech Co | Mgame Corp vs. Ewon Comfortech Co |
| Dongnam Chemical vs. SEOWONINTECHCoLtd | Dongnam Chemical vs. Dongwoon Anatech Co | Dongnam Chemical vs. SS TECH | Dongnam Chemical vs. SK Chemicals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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