Correlation Between Dongwoo Farm and Naver
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on Dongwoo Farm and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Naver.
Diversification Opportunities for Dongwoo Farm and Naver
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dongwoo and Naver is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Naver go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Naver
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Naver. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 1.46 times less risky than Naver. The stock trades about -0.11 of its potential returns per unit of risk. The Naver is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 21,450,000 in Naver on September 12, 2024 and sell it today you would lose (550,000) from holding Naver or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Naver
Performance |
| Timeline |
| Dongwoo Farm To |
| Naver |
Dongwoo Farm and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Naver
The main advantage of trading using opposite Dongwoo Farm and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food |
| Naver vs. Keyang Electric Machinery | Naver vs. TS Investment Corp | Naver vs. Dongwoo Farm To | Naver vs. Tuksu Engineering ConstructionLtd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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