Correlation Between Dong A and FOODWELL
Can any of the company-specific risk be diversified away by investing in both Dong A and FOODWELL 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 FOODWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Eltek and FOODWELL Co, you can compare the effects of market volatilities on Dong A and FOODWELL 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 FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and FOODWELL.
Diversification Opportunities for Dong A and FOODWELL
Poor diversification
The 3 months correlation between Dong and FOODWELL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL 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 Eltek are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Dong A i.e., Dong A and FOODWELL go up and down completely randomly.
Pair Corralation between Dong A and FOODWELL
Assuming the 90 days trading horizon Dong A Eltek is expected to under-perform the FOODWELL. In addition to that, Dong A is 1.67 times more volatile than FOODWELL Co. It trades about -0.08 of its total potential returns per unit of risk. FOODWELL Co is currently generating about -0.03 per unit of volatility. If you would invest 540,000 in FOODWELL Co on September 13, 2024 and sell it today you would lose (18,000) from holding FOODWELL Co or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. FOODWELL Co
Performance |
| Timeline |
| Dong A Eltek |
| FOODWELL |
Dong A and FOODWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and FOODWELL
The main advantage of trading using opposite Dong A and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.| Dong A vs. Cube Entertainment | Dong A vs. Dreamus Company | Dong A vs. LG Energy Solution | Dong A vs. Dongwon System |
| FOODWELL vs. Korea New Network | FOODWELL vs. ICD Co | FOODWELL vs. DYPNF CoLtd | FOODWELL vs. Solution Advanced 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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