Correlation Between Dong A and Formetal
Can any of the company-specific risk be diversified away by investing in both Dong A and Formetal 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 Formetal 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 Formetal Co, you can compare the effects of market volatilities on Dong A and Formetal 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 Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Formetal.
Diversification Opportunities for Dong A and Formetal
Modest diversification
The 3 months correlation between Dong and Formetal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Dong A i.e., Dong A and Formetal go up and down completely randomly.
Pair Corralation between Dong A and Formetal
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 2.57 times more return on investment than Formetal. However, Dong A is 2.57 times more volatile than Formetal Co. It trades about 0.12 of its potential returns per unit of risk. Formetal Co is currently generating about -0.09 per unit of risk. If you would invest 322,000 in Dong A Steel Technology on August 28, 2024 and sell it today you would earn a total of 31,500 from holding Dong A Steel Technology or generate 9.78% 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. Formetal Co
Performance |
| Timeline |
| Dong A Steel |
| Formetal |
Dong A and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Formetal
The main advantage of trading using opposite Dong A and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. DAEMO Engineering 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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