Correlation Between INSUN Environmental and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both INSUN Environmental and Dongil Metal 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 INSUN Environmental and Dongil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSUN Environmental New and Dongil Metal Co, you can compare the effects of market volatilities on INSUN Environmental and Dongil Metal 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 INSUN Environmental with a short position of Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Dongil Metal.
Diversification Opportunities for INSUN Environmental and Dongil Metal
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSUN and Dongil is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and INSUN Environmental 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 INSUN Environmental New are associated (or correlated) with Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of INSUN Environmental i.e., INSUN Environmental and Dongil Metal go up and down completely randomly.
Pair Corralation between INSUN Environmental and Dongil Metal
Assuming the 90 days trading horizon INSUN Environmental New is expected to generate 2.83 times more return on investment than Dongil Metal. However, INSUN Environmental is 2.83 times more volatile than Dongil Metal Co. It trades about 0.12 of its potential returns per unit of risk. Dongil Metal Co is currently generating about -0.22 per unit of risk. If you would invest 500,000 in INSUN Environmental New on September 24, 2024 and sell it today you would earn a total of 46,000 from holding INSUN Environmental New or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
INSUN Environmental New vs. Dongil Metal Co
Performance |
| Timeline |
| INSUN Environmental New |
| Dongil Metal |
INSUN Environmental and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSUN Environmental and Dongil Metal
The main advantage of trading using opposite INSUN Environmental and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal's long position.| INSUN Environmental vs. Busan Industrial Co | INSUN Environmental vs. Busan Ind | INSUN Environmental vs. Mirae Asset Daewoo | INSUN Environmental vs. Shinhan WTI Futures |
| Dongil Metal vs. INSUN Environmental New | Dongil Metal vs. Finebesteel | Dongil Metal vs. Bookook Steel | Dongil Metal vs. J Steel 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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