Correlation Between Dong A and Rorze Systems
Can any of the company-specific risk be diversified away by investing in both Dong A and Rorze Systems 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 Rorze Systems 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 Rorze Systems, you can compare the effects of market volatilities on Dong A and Rorze Systems 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 Rorze Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Rorze Systems.
Diversification Opportunities for Dong A and Rorze Systems
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dong and Rorze is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and Rorze Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rorze Systems 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 Rorze Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rorze Systems has no effect on the direction of Dong A i.e., Dong A and Rorze Systems go up and down completely randomly.
Pair Corralation between Dong A and Rorze Systems
Assuming the 90 days trading horizon Dong A Eltek is expected to under-perform the Rorze Systems. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Eltek is 1.62 times less risky than Rorze Systems. The stock trades about -0.43 of its potential returns per unit of risk. The Rorze Systems is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 1,891,583 in Rorze Systems on October 20, 2024 and sell it today you would lose (224,583) from holding Rorze Systems or give up 11.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. Rorze Systems
Performance |
| Timeline |
| Dong A Eltek |
| Rorze Systems |
Dong A and Rorze Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Rorze Systems
The main advantage of trading using opposite Dong A and Rorze Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Rorze Systems 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 Rorze Systems will offset losses from the drop in Rorze Systems' long position.| Dong A vs. Hankukpackage Co | Dong A vs. SBI Investment KOREA | Dong A vs. SK Chemicals Co | Dong A vs. Haitai Confectionery Foods |
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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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