Correlation Between Dongkuk Structures and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Dongkuk Structures and Iljin 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 Dongkuk Structures and Iljin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongkuk Structures Construction and Iljin Materials Co, you can compare the effects of market volatilities on Dongkuk Structures and Iljin 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 Dongkuk Structures with a short position of Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Structures and Iljin Materials.
Diversification Opportunities for Dongkuk Structures and Iljin Materials
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongkuk and Iljin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials and Dongkuk Structures 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 Dongkuk Structures Construction are associated (or correlated) with Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and Iljin Materials go up and down completely randomly.
Pair Corralation between Dongkuk Structures and Iljin Materials
Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to generate 0.99 times more return on investment than Iljin Materials. However, Dongkuk Structures Construction is 1.01 times less risky than Iljin Materials. It trades about 0.09 of its potential returns per unit of risk. Iljin Materials Co is currently generating about -0.36 per unit of risk. If you would invest 216,000 in Dongkuk Structures Construction on September 13, 2024 and sell it today you would earn a total of 12,500 from holding Dongkuk Structures Construction or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Structures Constructio vs. Iljin Materials Co
Performance |
| Timeline |
| Dongkuk Structures |
| Iljin Materials |
Dongkuk Structures and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Structures and Iljin Materials
The main advantage of trading using opposite Dongkuk Structures and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Structures position performs unexpectedly, Iljin 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 Iljin Materials will offset losses from the drop in Iljin Materials' long position.| Dongkuk Structures vs. BooKook Steel Co | Dongkuk Structures vs. Han Kook Steel | Dongkuk Structures vs. Husteel | Dongkuk Structures vs. Hanshin Construction Co |
| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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