Correlation Between Dong A and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Dong A and Kwang Jin 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 Kwang Jin 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 Kwang Jin Ind, you can compare the effects of market volatilities on Dong A and Kwang Jin 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 Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Kwang Jin.
Diversification Opportunities for Dong A and Kwang Jin
Modest diversification
The 3 months correlation between Dong and Kwang is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind 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 Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Dong A i.e., Dong A and Kwang Jin go up and down completely randomly.
Pair Corralation between Dong A and Kwang Jin
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 0.97 times more return on investment than Kwang Jin. However, Dong A Steel Technology is 1.04 times less risky than Kwang Jin. It trades about 0.22 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about 0.01 per unit of risk. If you would invest 292,925 in Dong A Steel Technology on October 14, 2024 and sell it today you would earn a total of 19,075 from holding Dong A Steel Technology or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Kwang Jin Ind
Performance |
| Timeline |
| Dong A Steel |
| Kwang Jin Ind |
Dong A and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Kwang Jin
The main advantage of trading using opposite Dong A and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| Dong A vs. GS Retail Co | Dong A vs. Air Busan Co | Dong A vs. Chorokbaem Healthcare Co | Dong A vs. ABOV Semiconductor Co |
| Kwang Jin vs. Lotte Non Life Insurance | Kwang Jin vs. InfoBank | Kwang Jin vs. KakaoBank Corp | Kwang Jin vs. Dong A Steel Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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