Correlation Between Dongwoo Farm and J Steel
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and J Steel 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 J Steel 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 J Steel Co, you can compare the effects of market volatilities on Dongwoo Farm and J Steel 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 J Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and J Steel.
Diversification Opportunities for Dongwoo Farm and J Steel
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongwoo and 023440 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel 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 J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and J Steel go up and down completely randomly.
Pair Corralation between Dongwoo Farm and J Steel
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 4.31 times less risky than J Steel. The stock trades about -0.17 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 177,800 in J Steel Co on September 1, 2024 and sell it today you would earn a total of 1,200 from holding J Steel Co or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. J Steel Co
Performance |
| Timeline |
| Dongwoo Farm To |
| J Steel |
Dongwoo Farm and J Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and J Steel
The main advantage of trading using opposite Dongwoo Farm and J Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, J Steel 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 J Steel will offset losses from the drop in J Steel's long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. Busan Industrial Co | Dongwoo Farm vs. Busan Ind | Dongwoo Farm vs. Mirae Asset Daewoo |
| J Steel vs. Koh Young Technology | J Steel vs. NewFlex Technology Co | J Steel vs. Samlip General Foods | J Steel vs. Hankukpackage 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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