Correlation Between Dong A and Clean Science
Can any of the company-specific risk be diversified away by investing in both Dong A and Clean Science 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 Clean Science 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 Clean Science co, you can compare the effects of market volatilities on Dong A and Clean Science 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 Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Clean Science.
Diversification Opportunities for Dong A and Clean Science
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dong and Clean is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co 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 Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of Dong A i.e., Dong A and Clean Science go up and down completely randomly.
Pair Corralation between Dong A and Clean Science
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 1.43 times more return on investment than Clean Science. However, Dong A is 1.43 times more volatile than Clean Science co. It trades about 0.01 of its potential returns per unit of risk. Clean Science co is currently generating about -0.02 per unit of risk. If you would invest 319,949 in Dong A Steel Technology on November 2, 2024 and sell it today you would lose (1,949) from holding Dong A Steel Technology or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Clean Science co
Performance |
| Timeline |
| Dong A Steel |
| Clean Science co |
Dong A and Clean Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Clean Science
The main advantage of trading using opposite Dong A and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's long position.| Dong A vs. Nice Information Telecommunication | Dong A vs. Grand Korea Leisure | Dong A vs. Asiana Airlines | Dong A vs. Ssangyong Information Communication |
| Clean Science vs. Aprogen Healthcare Games | Clean Science vs. DC Media Co | Clean Science vs. Jeju Air Co | Clean Science vs. Daewon Media 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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