Correlation Between Dongwoo Farm and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Dongwoo Farm and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Hanjoo Light.
Diversification Opportunities for Dongwoo Farm and Hanjoo Light
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwoo and Hanjoo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Hanjoo Light go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Hanjoo Light
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.33 times more return on investment than Hanjoo Light. However, Dongwoo Farm To is 3.06 times less risky than Hanjoo Light. It trades about -0.14 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.11 per unit of risk. If you would invest 298,000 in Dongwoo Farm To on September 4, 2024 and sell it today you would lose (103,800) from holding Dongwoo Farm To or give up 34.83% 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. Hanjoo Light Metal
Performance |
| Timeline |
| Dongwoo Farm To |
| Hanjoo Light Metal |
Dongwoo Farm and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Hanjoo Light
The main advantage of trading using opposite Dongwoo Farm and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wooyang Co |
| Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. Samsung Electronics Co | Hanjoo Light vs. LG Energy Solution | Hanjoo Light vs. SK Hynix |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |