Correlation Between Dongwoo Farm and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Dongil Metal 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 Dongil Metal 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 Dongil Metal Co, you can compare the effects of market volatilities on Dongwoo Farm and Dongil Metal 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 Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Dongil Metal.
Diversification Opportunities for Dongwoo Farm and Dongil Metal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwoo and Dongil is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Dongil Metal go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Dongil Metal
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.53 times more return on investment than Dongil Metal. However, Dongwoo Farm To is 1.89 times less risky than Dongil Metal. It trades about -0.04 of its potential returns per unit of risk. Dongil Metal Co is currently generating about -0.06 per unit of risk. If you would invest 273,000 in Dongwoo Farm To on August 29, 2024 and sell it today you would lose (83,300) from holding Dongwoo Farm To or give up 30.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.51% |
| Values | Daily Returns |
Dongwoo Farm To vs. Dongil Metal Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Dongil Metal |
Dongwoo Farm and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Dongil Metal
The main advantage of trading using opposite Dongwoo Farm and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal'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 |
| Dongil Metal vs. LG Chemicals | Dongil Metal vs. Lotte Chemical Corp | Dongil Metal vs. Hyundai Steel | Dongil Metal vs. Seah Steel Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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