Correlation Between Dongwoo Farm and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Finebesteel 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 Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on Dongwoo Farm and Finebesteel 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 Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Finebesteel.
Diversification Opportunities for Dongwoo Farm and Finebesteel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongwoo and Finebesteel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Finebesteel go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Finebesteel
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Finebesteel. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 2.25 times less risky than Finebesteel. The stock trades about -0.11 of its potential returns per unit of risk. The Finebesteel is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 123,400 in Finebesteel on September 1, 2024 and sell it today you would lose (18,700) from holding Finebesteel or give up 15.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Finebesteel
Performance |
| Timeline |
| Dongwoo Farm To |
| Finebesteel |
Dongwoo Farm and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Finebesteel
The main advantage of trading using opposite Dongwoo Farm and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. Busan Industrial Co | Dongwoo Farm vs. Busan Ind | Dongwoo Farm vs. Mirae Asset Daewoo |
| Finebesteel vs. Samyang Foods Co | Finebesteel vs. Visang Education | Finebesteel vs. Sung Bo Chemicals | Finebesteel vs. Kukdong Oil Chemicals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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