Correlation Between Dong A and Green Cross
Can any of the company-specific risk be diversified away by investing in both Dong A and Green Cross 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 Green Cross 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 Green Cross Medical, you can compare the effects of market volatilities on Dong A and Green Cross 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 Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Green Cross.
Diversification Opportunities for Dong A and Green Cross
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dong and Green is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and Green Cross Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Medical 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 Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Medical has no effect on the direction of Dong A i.e., Dong A and Green Cross go up and down completely randomly.
Pair Corralation between Dong A and Green Cross
Assuming the 90 days trading horizon Dong A Eltek is expected to generate 0.96 times more return on investment than Green Cross. However, Dong A Eltek is 1.05 times less risky than Green Cross. It trades about -0.02 of its potential returns per unit of risk. Green Cross Medical is currently generating about -0.15 per unit of risk. If you would invest 464,000 in Dong A Eltek on August 28, 2024 and sell it today you would lose (5,500) from holding Dong A Eltek or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. Green Cross Medical
Performance |
| Timeline |
| Dong A Eltek |
| Green Cross Medical |
Dong A and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Green Cross
The main advantage of trading using opposite Dong A and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' 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 |
| Green Cross vs. Cots Technology Co | Green Cross vs. Solution Advanced Technology | Green Cross vs. Eagle Veterinary Technology | Green Cross vs. NewFlex Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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