Correlation Between Dongkuk Structures and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Dongkuk Structures and Finebesteel 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 Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on Dongkuk Structures and Finebesteel 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 Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Structures and Finebesteel.
Diversification Opportunities for Dongkuk Structures and Finebesteel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongkuk and Finebesteel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and Finebesteel go up and down completely randomly.
Pair Corralation between Dongkuk Structures and Finebesteel
Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to under-perform the Finebesteel. But the stock apears to be less risky and, when comparing its historical volatility, Dongkuk Structures Construction is 1.71 times less risky than Finebesteel. The stock trades about -0.43 of its potential returns per unit of risk. The Finebesteel is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 92,100 in Finebesteel on November 5, 2024 and sell it today you would earn a total of 10,300 from holding Finebesteel or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Structures Constructio vs. Finebesteel
Performance |
| Timeline |
| Dongkuk Structures |
| Finebesteel |
Dongkuk Structures and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Structures and Finebesteel
The main advantage of trading using opposite Dongkuk Structures and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Structures position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.The idea behind Dongkuk Structures Construction and Finebesteel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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