Correlation Between Dong A and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Dong A and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Dong A and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Lion Chemtech.
Diversification Opportunities for Dong A and Lion Chemtech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dong and Lion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Dong A i.e., Dong A and Lion Chemtech go up and down completely randomly.
Pair Corralation between Dong A and Lion Chemtech
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 0.37 times more return on investment than Lion Chemtech. However, Dong A Steel Technology is 2.67 times less risky than Lion Chemtech. It trades about 0.26 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about 0.0 per unit of risk. If you would invest 292,925 in Dong A Steel Technology on October 17, 2024 and sell it today you would earn a total of 23,075 from holding Dong A Steel Technology or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Lion Chemtech Co
Performance |
| Timeline |
| Dong A Steel |
| Lion Chemtech |
Dong A and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Lion Chemtech
The main advantage of trading using opposite Dong A and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Dong A vs. Dongbang Transport Logistics | Dong A vs. System and Application | Dong A vs. DataSolution | Dong A vs. Duksan Hi Metal |
| Lion Chemtech vs. LEENO Industrial | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. Daiyang Metal Co | Lion Chemtech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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