Correlation Between Dongwoo Farm and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Dongwoo Farm and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Seoam Machinery.
Diversification Opportunities for Dongwoo Farm and Seoam Machinery
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongwoo and Seoam is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Seoam Machinery go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Seoam Machinery
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Seoam Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 1.9 times less risky than Seoam Machinery. The stock trades about -0.18 of its potential returns per unit of risk. The Seoam Machinery Industry is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 377,000 in Seoam Machinery Industry on August 29, 2024 and sell it today you would earn a total of 25,000 from holding Seoam Machinery Industry or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Seoam Machinery Industry
Performance |
| Timeline |
| Dongwoo Farm To |
| Seoam Machinery Industry |
Dongwoo Farm and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Seoam Machinery
The main advantage of trading using opposite Dongwoo Farm and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery'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 |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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