Correlation Between Dongwoo Farm and Barunson Entertainment
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Barunson Entertainment 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 Barunson Entertainment 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 Barunson Entertainment Arts, you can compare the effects of market volatilities on Dongwoo Farm and Barunson Entertainment 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 Barunson Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Barunson Entertainment.
Diversification Opportunities for Dongwoo Farm and Barunson Entertainment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwoo and Barunson is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Barunson Entertainment Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barunson Entertainment 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 Barunson Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barunson Entertainment has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Barunson Entertainment go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Barunson Entertainment
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.68 times more return on investment than Barunson Entertainment. However, Dongwoo Farm To is 1.46 times less risky than Barunson Entertainment. It trades about -0.18 of its potential returns per unit of risk. Barunson Entertainment Arts is currently generating about -0.18 per unit of risk. If you would invest 200,000 in Dongwoo Farm To on August 29, 2024 and sell it today you would lose (10,300) from holding Dongwoo Farm To or give up 5.15% 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. Barunson Entertainment Arts
Performance |
| Timeline |
| Dongwoo Farm To |
| Barunson Entertainment |
Dongwoo Farm and Barunson Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Barunson Entertainment
The main advantage of trading using opposite Dongwoo Farm and Barunson Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Barunson Entertainment 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 Barunson Entertainment will offset losses from the drop in Barunson Entertainment's long position.| Dongwoo Farm vs. J Steel Co | Dongwoo Farm vs. Hanil Iron Steel | Dongwoo Farm vs. DAEDUCK ELECTRONICS CoLtd | Dongwoo Farm vs. Han Kook Steel |
| Barunson Entertainment vs. AfreecaTV Co | Barunson Entertainment vs. SS TECH | Barunson Entertainment vs. Busan Industrial Co | Barunson Entertainment vs. Busan Ind |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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