Correlation Between Dong A and MEDICOX
Can any of the company-specific risk be diversified away by investing in both Dong A and MEDICOX 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 MEDICOX 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 MEDICOX Co, you can compare the effects of market volatilities on Dong A and MEDICOX 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 MEDICOX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and MEDICOX.
Diversification Opportunities for Dong A and MEDICOX
Pay attention - limited upside
The 3 months correlation between Dong and MEDICOX is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and MEDICOX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICOX 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 MEDICOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICOX has no effect on the direction of Dong A i.e., Dong A and MEDICOX go up and down completely randomly.
Pair Corralation between Dong A and MEDICOX
Assuming the 90 days trading horizon Dong A is expected to generate 9.33 times less return on investment than MEDICOX. But when comparing it to its historical volatility, Dong A Eltek is 1.94 times less risky than MEDICOX. It trades about 0.04 of its potential returns per unit of risk. MEDICOX Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 32,100 in MEDICOX Co on August 26, 2024 and sell it today you would earn a total of 5,600 from holding MEDICOX Co or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. MEDICOX Co
Performance |
| Timeline |
| Dong A Eltek |
| MEDICOX |
Dong A and MEDICOX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and MEDICOX
The main advantage of trading using opposite Dong A and MEDICOX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, MEDICOX 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 MEDICOX will offset losses from the drop in MEDICOX's long position.| Dong A vs. Korea Real Estate | Dong A vs. Korea Ratings Co | Dong A vs. IQuest Co | Dong A vs. Wonbang Tech Co |
| MEDICOX vs. Vitzro Tech Co | MEDICOX vs. Busan Industrial Co | MEDICOX vs. Busan Ind | MEDICOX vs. Mirae Asset Daewoo |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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