Correlation Between Dongil Metal and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Lotte Fine 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 Dongil Metal and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongil Metal Co and Lotte Fine Chemical, you can compare the effects of market volatilities on Dongil Metal and Lotte Fine 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 Dongil Metal with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Lotte Fine.
Diversification Opportunities for Dongil Metal and Lotte Fine
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongil and Lotte is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Dongil Metal 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 Dongil Metal Co are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Dongil Metal i.e., Dongil Metal and Lotte Fine go up and down completely randomly.
Pair Corralation between Dongil Metal and Lotte Fine
Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 1.81 times more return on investment than Lotte Fine. However, Dongil Metal is 1.81 times more volatile than Lotte Fine Chemical. It trades about 0.06 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.09 per unit of risk. If you would invest 815,000 in Dongil Metal Co on November 4, 2024 and sell it today you would earn a total of 20,000 from holding Dongil Metal Co or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongil Metal Co vs. Lotte Fine Chemical
Performance |
| Timeline |
| Dongil Metal |
| Lotte Fine Chemical |
Dongil Metal and Lotte Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Lotte Fine
The main advantage of trading using opposite Dongil Metal and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Lotte Fine 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 Lotte Fine will offset losses from the drop in Lotte Fine's long position.| Dongil Metal vs. Seoam Machinery Industry | Dongil Metal vs. KCC Engineering Construction | Dongil Metal vs. Hanshin Construction Co | Dongil Metal vs. KEPCO Engineering Construction |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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