Correlation Between LF and Dongwha Enterprise
Can any of the company-specific risk be diversified away by investing in both LF and Dongwha Enterprise 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 LF and Dongwha Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LF Co and Dongwha Enterprise CoLtd, you can compare the effects of market volatilities on LF and Dongwha Enterprise 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 LF with a short position of Dongwha Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of LF and Dongwha Enterprise.
Diversification Opportunities for LF and Dongwha Enterprise
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between LF and Dongwha is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding LF Co and Dongwha Enterprise CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwha Enterprise CoLtd and LF 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 LF Co are associated (or correlated) with Dongwha Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwha Enterprise CoLtd has no effect on the direction of LF i.e., LF and Dongwha Enterprise go up and down completely randomly.
Pair Corralation between LF and Dongwha Enterprise
Assuming the 90 days trading horizon LF Co is expected to generate 1.18 times more return on investment than Dongwha Enterprise. However, LF is 1.18 times more volatile than Dongwha Enterprise CoLtd. It trades about -0.06 of its potential returns per unit of risk. Dongwha Enterprise CoLtd is currently generating about -0.14 per unit of risk. If you would invest 15,760,000 in LF Co on September 3, 2024 and sell it today you would lose (5,930,000) from holding LF Co or give up 37.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LF Co vs. Dongwha Enterprise CoLtd
Performance |
| Timeline |
| LF Co |
| Dongwha Enterprise CoLtd |
LF and Dongwha Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LF and Dongwha Enterprise
The main advantage of trading using opposite LF and Dongwha Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LF position performs unexpectedly, Dongwha Enterprise 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 Dongwha Enterprise will offset losses from the drop in Dongwha Enterprise's long position.The idea behind LF Co and Dongwha Enterprise CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dongwha Enterprise vs. Ananti Inc | Dongwha Enterprise vs. InBody CoLtd | Dongwha Enterprise vs. Dongsin Engineering Construction | Dongwha Enterprise vs. LF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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