Correlation Between Dongwoo Farm and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on Dongwoo Farm and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Industrial Bank.
Diversification Opportunities for Dongwoo Farm and Industrial Bank
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongwoo and Industrial is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Industrial Bank go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Industrial Bank
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Industrial Bank. In addition to that, Dongwoo Farm is 1.19 times more volatile than Industrial Bank. It trades about -0.02 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.56 per unit of volatility. If you would invest 1,435,000 in Industrial Bank on November 4, 2024 and sell it today you would earn a total of 118,000 from holding Industrial Bank or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Industrial Bank
Performance |
| Timeline |
| Dongwoo Farm To |
| Industrial Bank |
Dongwoo Farm and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Industrial Bank
The main advantage of trading using opposite Dongwoo Farm and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Dongwoo Farm vs. Dongil Metal Co | Dongwoo Farm vs. Heungkuk Metaltech CoLtd | Dongwoo Farm vs. Daiyang Metal Co | Dongwoo Farm vs. Hanjoo Light Metal |
| Industrial Bank vs. NH Investment Securities | Industrial Bank vs. iNtRON Biotechnology | Industrial Bank vs. Daol Investment Securities | Industrial Bank vs. Samyung Trading 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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