Correlation Between Dong A and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both Dong A and Ecoplastic 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 Ecoplastic 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 Ecoplastic, you can compare the effects of market volatilities on Dong A and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Ecoplastic.
Diversification Opportunities for Dong A and Ecoplastic
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dong and Ecoplastic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Dong A i.e., Dong A and Ecoplastic go up and down completely randomly.
Pair Corralation between Dong A and Ecoplastic
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Ecoplastic. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Steel Technology is 1.48 times less risky than Ecoplastic. The stock trades about -0.02 of its potential returns per unit of risk. The Ecoplastic is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 284,383 in Ecoplastic on September 3, 2024 and sell it today you would lose (44,383) from holding Ecoplastic or give up 15.61% 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. Ecoplastic
Performance |
| Timeline |
| Dong A Steel |
| Ecoplastic |
Dong A and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Ecoplastic
The main advantage of trading using opposite Dong A and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic's long position.| Dong A vs. JC Chemical Co | Dong A vs. Posco Chemical Co | Dong A vs. LG Chemicals | Dong A vs. Digital Power Communications |
| Ecoplastic vs. Hana Financial | Ecoplastic vs. KB Financial Group | Ecoplastic vs. LG Electronics | Ecoplastic vs. DAEDUCK ELECTRONICS CoLtd |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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