Correlation Between Dongwoo Farm and InfoBank
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and InfoBank 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 InfoBank 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 InfoBank, you can compare the effects of market volatilities on Dongwoo Farm and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and InfoBank.
Diversification Opportunities for Dongwoo Farm and InfoBank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongwoo and InfoBank is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and InfoBank go up and down completely randomly.
Pair Corralation between Dongwoo Farm and InfoBank
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.58 times more return on investment than InfoBank. However, Dongwoo Farm To is 1.72 times less risky than InfoBank. It trades about -0.02 of its potential returns per unit of risk. InfoBank is currently generating about -0.28 per unit of risk. If you would invest 193,800 in Dongwoo Farm To on November 4, 2024 and sell it today you would lose (800.00) from holding Dongwoo Farm To or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. InfoBank
Performance |
| Timeline |
| Dongwoo Farm To |
| InfoBank |
Dongwoo Farm and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and InfoBank
The main advantage of trading using opposite Dongwoo Farm and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank'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 |
| InfoBank vs. DoubleU Games Co | InfoBank vs. SCI Information Service | InfoBank vs. Kisan Telecom Co | InfoBank vs. Lotte Data Communication |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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