Correlation Between Dongkuk Structures and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Dongkuk Structures and Sungdo Engineering 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 Sungdo Engineering 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 Sungdo Engineering Construction, you can compare the effects of market volatilities on Dongkuk Structures and Sungdo Engineering 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 Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Structures and Sungdo Engineering.
Diversification Opportunities for Dongkuk Structures and Sungdo Engineering
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongkuk and Sungdo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering 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 Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Dongkuk Structures and Sungdo Engineering
Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to generate 1.16 times more return on investment than Sungdo Engineering. However, Dongkuk Structures is 1.16 times more volatile than Sungdo Engineering Construction. It trades about -0.03 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.08 per unit of risk. If you would invest 250,000 in Dongkuk Structures Construction on October 26, 2024 and sell it today you would lose (20,000) from holding Dongkuk Structures Construction or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Structures Constructio vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Dongkuk Structures |
| Sungdo Engineering |
Dongkuk Structures and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Structures and Sungdo Engineering
The main advantage of trading using opposite Dongkuk Structures and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Structures position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Dongkuk Structures vs. Bookook Steel | Dongkuk Structures vs. A Tech Solution Co | Dongkuk Structures vs. Finebesteel | Dongkuk Structures vs. Hyundai BNG Steel |
| Sungdo Engineering vs. E Investment Development | Sungdo Engineering vs. Samick Musical Instruments | Sungdo Engineering vs. Woori Technology Investment | Sungdo Engineering vs. Playgram Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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