Correlation Between Dongwoo Farm and Golden Bridge
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Golden Bridge 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 Dongwoo Farm and Golden Bridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Golden Bridge Investment, you can compare the effects of market volatilities on Dongwoo Farm and Golden Bridge 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 Dongwoo Farm with a short position of Golden Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Golden Bridge.
Diversification Opportunities for Dongwoo Farm and Golden Bridge
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwoo and Golden is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Golden Bridge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Bridge Investment and Dongwoo Farm 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 Dongwoo Farm To are associated (or correlated) with Golden Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Bridge Investment has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Golden Bridge go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Golden Bridge
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Golden Bridge. In addition to that, Dongwoo Farm is 1.01 times more volatile than Golden Bridge Investment. It trades about -0.19 of its total potential returns per unit of risk. Golden Bridge Investment is currently generating about -0.11 per unit of volatility. If you would invest 45,100 in Golden Bridge Investment on September 3, 2024 and sell it today you would lose (1,500) from holding Golden Bridge Investment or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Golden Bridge Investment
Performance |
| Timeline |
| Dongwoo Farm To |
| Golden Bridge Investment |
Dongwoo Farm and Golden Bridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Golden Bridge
The main advantage of trading using opposite Dongwoo Farm and Golden Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Golden Bridge 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 Golden Bridge will offset losses from the drop in Golden Bridge's long position.| Dongwoo Farm vs. Hanjoo Light Metal | Dongwoo Farm vs. LG Chemicals | Dongwoo Farm vs. Hannong Chemicals | Dongwoo Farm vs. Kukil Metal Co |
| Golden Bridge vs. Samhwa Paint Industrial | Golden Bridge vs. Samji Electronics Co | Golden Bridge vs. LG Electronics | Golden Bridge vs. Sungwoo Electronics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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