Correlation Between Dongwoo Farm and LS Materials
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and LS Materials 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 LS Materials 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 LS Materials, you can compare the effects of market volatilities on Dongwoo Farm and LS Materials 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 LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and LS Materials.
Diversification Opportunities for Dongwoo Farm and LS Materials
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and 417200 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials 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 LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and LS Materials go up and down completely randomly.
Pair Corralation between Dongwoo Farm and LS Materials
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the LS Materials. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 12.34 times less risky than LS Materials. The stock trades about -0.04 of its potential returns per unit of risk. The LS Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 599,449 in LS Materials on October 28, 2024 and sell it today you would earn a total of 766,551 from holding LS Materials or generate 127.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.02% |
| Values | Daily Returns |
Dongwoo Farm To vs. LS Materials
Performance |
| Timeline |
| Dongwoo Farm To |
| LS Materials |
Dongwoo Farm and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and LS Materials
The main advantage of trading using opposite Dongwoo Farm and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, LS Materials 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 LS Materials will offset losses from the drop in LS Materials' long position.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food |
| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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