Correlation Between Dongwoo Farm and Maeil Dairies
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Maeil Dairies 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 Maeil Dairies 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 Maeil Dairies Co, you can compare the effects of market volatilities on Dongwoo Farm and Maeil Dairies 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 Maeil Dairies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Maeil Dairies.
Diversification Opportunities for Dongwoo Farm and Maeil Dairies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and Maeil is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Maeil Dairies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maeil Dairies 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 Maeil Dairies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maeil Dairies has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Maeil Dairies go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Maeil Dairies
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Maeil Dairies. In addition to that, Dongwoo Farm is 1.07 times more volatile than Maeil Dairies Co. It trades about -0.19 of its total potential returns per unit of risk. Maeil Dairies Co is currently generating about -0.03 per unit of volatility. If you would invest 4,095,000 in Maeil Dairies Co on August 25, 2024 and sell it today you would lose (280,000) from holding Maeil Dairies Co or give up 6.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Maeil Dairies Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Maeil Dairies |
Dongwoo Farm and Maeil Dairies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Maeil Dairies
The main advantage of trading using opposite Dongwoo Farm and Maeil Dairies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Maeil Dairies 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 Maeil Dairies will offset losses from the drop in Maeil Dairies' long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Wooyang Co | Dongwoo Farm vs. Asia Seed CoLtd |
| Maeil Dairies vs. HYUNDAI FEED | Maeil Dairies vs. Dongwoo Farm To | Maeil Dairies vs. Wooyang Co | Maeil Dairies vs. Asia Seed CoLtd |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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