Correlation Between TK Chemical and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both TK Chemical and Dongwon Metal 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 TK Chemical and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Dongwon Metal Co, you can compare the effects of market volatilities on TK Chemical and Dongwon Metal 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 TK Chemical with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Dongwon Metal.
Diversification Opportunities for TK Chemical and Dongwon Metal
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 104480 and Dongwon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and TK Chemical 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 TK Chemical are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of TK Chemical i.e., TK Chemical and Dongwon Metal go up and down completely randomly.
Pair Corralation between TK Chemical and Dongwon Metal
Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Dongwon Metal. But the stock apears to be less risky and, when comparing its historical volatility, TK Chemical is 1.52 times less risky than Dongwon Metal. The stock trades about -0.29 of its potential returns per unit of risk. The Dongwon Metal Co is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 122,700 in Dongwon Metal Co on August 29, 2024 and sell it today you would lose (9,200) from holding Dongwon Metal Co or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. Dongwon Metal Co
Performance |
| Timeline |
| TK Chemical |
| Dongwon Metal |
TK Chemical and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Dongwon Metal
The main advantage of trading using opposite TK Chemical and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| TK Chemical vs. KMH Hitech Co | TK Chemical vs. GemVaxKAEL CoLtd | TK Chemical vs. Busan Industrial Co | TK Chemical vs. Busan Ind |
| Dongwon Metal vs. ABOV Semiconductor Co | Dongwon Metal vs. DataSolution | Dongwon Metal vs. Ssangyong Information Communication | Dongwon Metal vs. Nable Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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