Correlation Between Dong A and Korea Refractories
Can any of the company-specific risk be diversified away by investing in both Dong A and Korea Refractories 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 Dong A and Korea Refractories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Korea Refractories Co, you can compare the effects of market volatilities on Dong A and Korea Refractories 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 Dong A with a short position of Korea Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Korea Refractories.
Diversification Opportunities for Dong A and Korea Refractories
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dong and Korea is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories and Dong A 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 Dong A Steel Technology are associated (or correlated) with Korea Refractories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refractories has no effect on the direction of Dong A i.e., Dong A and Korea Refractories go up and down completely randomly.
Pair Corralation between Dong A and Korea Refractories
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 1.74 times more return on investment than Korea Refractories. However, Dong A is 1.74 times more volatile than Korea Refractories Co. It trades about 0.37 of its potential returns per unit of risk. Korea Refractories Co is currently generating about 0.33 per unit of risk. If you would invest 282,308 in Dong A Steel Technology on October 25, 2024 and sell it today you would earn a total of 32,692 from holding Dong A Steel Technology or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Korea Refractories Co
Performance |
| Timeline |
| Dong A Steel |
| Korea Refractories |
Dong A and Korea Refractories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Korea Refractories
The main advantage of trading using opposite Dong A and Korea Refractories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Korea Refractories 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 Korea Refractories will offset losses from the drop in Korea Refractories' long position.| Dong A vs. Lotte Data Communication | Dong A vs. Nice Information Telecommunication | Dong A vs. Iljin Display | Dong A vs. Digital Power Communications |
| Korea Refractories vs. KB Financial Group | Korea Refractories vs. Shinhan Financial Group | Korea Refractories vs. Hana Financial | Korea Refractories vs. Woori Financial Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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