Correlation Between Dong A and SK Bioscience
Can any of the company-specific risk be diversified away by investing in both Dong A and SK Bioscience 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 SK Bioscience 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 SK Bioscience Co, you can compare the effects of market volatilities on Dong A and SK Bioscience 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 SK Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and SK Bioscience.
Diversification Opportunities for Dong A and SK Bioscience
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dong and 302440 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience 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 SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Dong A i.e., Dong A and SK Bioscience go up and down completely randomly.
Pair Corralation between Dong A and SK Bioscience
Assuming the 90 days trading horizon Dong A Eltek is expected to under-perform the SK Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Eltek is 1.25 times less risky than SK Bioscience. The stock trades about -0.15 of its potential returns per unit of risk. The SK Bioscience Co is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 5,320,000 in SK Bioscience Co on August 30, 2024 and sell it today you would lose (425,000) from holding SK Bioscience Co or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. SK Bioscience Co
Performance |
| Timeline |
| Dong A Eltek |
| SK Bioscience |
Dong A and SK Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and SK Bioscience
The main advantage of trading using opposite Dong A and SK Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, SK Bioscience 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 SK Bioscience will offset losses from the drop in SK Bioscience's long position.| Dong A vs. DataSolution | Dong A vs. Lotte Data Communication | Dong A vs. Hankuk Steel Wire | Dong A vs. Shinsegae Information Communication |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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