Correlation Between ABOV Semiconductor and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both ABOV Semiconductor and Dongnam Chemical 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 ABOV Semiconductor and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABOV Semiconductor Co and Dongnam Chemical Co, you can compare the effects of market volatilities on ABOV Semiconductor and Dongnam Chemical 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 ABOV Semiconductor with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABOV Semiconductor and Dongnam Chemical.
Diversification Opportunities for ABOV Semiconductor and Dongnam Chemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABOV and Dongnam is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ABOV Semiconductor Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and ABOV Semiconductor 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 ABOV Semiconductor Co are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of ABOV Semiconductor i.e., ABOV Semiconductor and Dongnam Chemical go up and down completely randomly.
Pair Corralation between ABOV Semiconductor and Dongnam Chemical
Assuming the 90 days trading horizon ABOV Semiconductor Co is expected to under-perform the Dongnam Chemical. In addition to that, ABOV Semiconductor is 1.67 times more volatile than Dongnam Chemical Co. It trades about -0.3 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.25 per unit of volatility. If you would invest 3,285,000 in Dongnam Chemical Co on August 31, 2024 and sell it today you would lose (295,000) from holding Dongnam Chemical Co or give up 8.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABOV Semiconductor Co vs. Dongnam Chemical Co
Performance |
| Timeline |
| ABOV Semiconductor |
| Dongnam Chemical |
ABOV Semiconductor and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABOV Semiconductor and Dongnam Chemical
The main advantage of trading using opposite ABOV Semiconductor and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABOV Semiconductor position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| ABOV Semiconductor vs. Dongsin Engineering Construction | ABOV Semiconductor vs. Doosan Fuel Cell | ABOV Semiconductor vs. Daishin Balance 1 | ABOV Semiconductor vs. Total Soft Bank |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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