Correlation Between Dong A and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both Dong A and Solution Advanced 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 Solution Advanced 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 Solution Advanced Technology, you can compare the effects of market volatilities on Dong A and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Solution Advanced.
Diversification Opportunities for Dong A and Solution Advanced
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dong and Solution is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Dong A i.e., Dong A and Solution Advanced go up and down completely randomly.
Pair Corralation between Dong A and Solution Advanced
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 0.97 times more return on investment than Solution Advanced. However, Dong A Steel Technology is 1.03 times less risky than Solution Advanced. It trades about -0.02 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about -0.07 per unit of risk. If you would invest 459,500 in Dong A Steel Technology on August 31, 2024 and sell it today you would lose (119,500) from holding Dong A Steel Technology or give up 26.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Solution Advanced Technology
Performance |
| Timeline |
| Dong A Steel |
| Solution Advanced |
Dong A and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Solution Advanced
The main advantage of trading using opposite Dong A and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
| Solution Advanced vs. UJU Electronics Co | Solution Advanced vs. LG Electronics | Solution Advanced vs. Daejoo Electronic Materials | Solution Advanced vs. Sungmoon Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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