Correlation Between Dong A and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both Dong A and SungMoon Electronics 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 SungMoon Electronics 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 SungMoon Electronics Co, you can compare the effects of market volatilities on Dong A and SungMoon Electronics 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 SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and SungMoon Electronics.
Diversification Opportunities for Dong A and SungMoon Electronics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dong and SungMoon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon Electronics 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 SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of Dong A i.e., Dong A and SungMoon Electronics go up and down completely randomly.
Pair Corralation between Dong A and SungMoon Electronics
Assuming the 90 days trading horizon Dong A is expected to generate 2.87 times less return on investment than SungMoon Electronics. In addition to that, Dong A is 1.09 times more volatile than SungMoon Electronics Co. It trades about 0.07 of its total potential returns per unit of risk. SungMoon Electronics Co is currently generating about 0.22 per unit of volatility. If you would invest 110,600 in SungMoon Electronics Co on November 7, 2024 and sell it today you would earn a total of 7,900 from holding SungMoon Electronics Co or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. SungMoon Electronics Co
Performance |
| Timeline |
| Dong A Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SungMoon Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dong A and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and SungMoon Electronics
The main advantage of trading using opposite Dong A and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, SungMoon Electronics 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| Dong A vs. Korea Petro Chemical | Dong A vs. Shinhan Inverse Copper | Dong A vs. SH Energy Chemical | Dong A vs. Namhae Chemical |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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