Correlation Between Dongwoo Farm and DC Media
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and DC Media 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 DC Media 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 DC Media Co, you can compare the effects of market volatilities on Dongwoo Farm and DC Media 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 DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and DC Media.
Diversification Opportunities for Dongwoo Farm and DC Media
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and 263720 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media 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 DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and DC Media go up and down completely randomly.
Pair Corralation between Dongwoo Farm and DC Media
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the DC Media. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 2.91 times less risky than DC Media. The stock trades about -0.05 of its potential returns per unit of risk. The DC Media Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,780,000 in DC Media Co on August 25, 2024 and sell it today you would earn a total of 75,000 from holding DC Media Co or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. DC Media Co
Performance |
| Timeline |
| Dongwoo Farm To |
| DC Media |
Dongwoo Farm and DC Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and DC Media
The main advantage of trading using opposite Dongwoo Farm and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, DC Media 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 DC Media will offset losses from the drop in DC Media's long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Wooyang Co | Dongwoo Farm vs. Asia Seed CoLtd |
| DC Media vs. DB Financial Investment | DC Media vs. Korea Information Engineering | DC Media vs. Samyang Foods Co | DC Media vs. System and Application |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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