Correlation Between Dong A and Dongil Steel
Can any of the company-specific risk be diversified away by investing in both Dong A and Dongil Steel 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 Dongil Steel 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 Dongil Steel Co, you can compare the effects of market volatilities on Dong A and Dongil Steel 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 Dongil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Dongil Steel.
Diversification Opportunities for Dong A and Dongil Steel
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dong and Dongil is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Dongil Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Steel 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 Dongil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Steel has no effect on the direction of Dong A i.e., Dong A and Dongil Steel go up and down completely randomly.
Pair Corralation between Dong A and Dongil Steel
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 0.67 times more return on investment than Dongil Steel. However, Dong A Steel Technology is 1.48 times less risky than Dongil Steel. It trades about -0.02 of its potential returns per unit of risk. Dongil Steel Co is currently generating about -0.01 per unit of risk. If you would invest 500,000 in Dong A Steel Technology on August 29, 2024 and sell it today you would lose (148,500) from holding Dong A Steel Technology or give up 29.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Dongil Steel Co
Performance |
| Timeline |
| Dong A Steel |
| Dongil Steel |
Dong A and Dongil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Dongil Steel
The main advantage of trading using opposite Dong A and Dongil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Dongil Steel 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 Dongil Steel will offset losses from the drop in Dongil Steel's long position.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
| Dongil Steel vs. Keum Kang Steel | Dongil Steel vs. PJ Metal Co | Dongil Steel vs. Samhyun Steel Co | Dongil Steel vs. Gyeongnam Steel 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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