Correlation Between Dongil Metal and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both Dongil Metal 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 Dongil Metal and Dongwon Metal 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 Dongwon Metal Co, you can compare the effects of market volatilities on Dongil Metal 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 Dongil Metal with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Dongwon Metal.
Diversification Opportunities for Dongil Metal and Dongwon Metal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongil and Dongwon is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal 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 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 Dongil Metal i.e., Dongil Metal and Dongwon Metal go up and down completely randomly.
Pair Corralation between Dongil Metal and Dongwon Metal
Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 0.33 times more return on investment than Dongwon Metal. However, Dongil Metal Co is 3.07 times less risky than Dongwon Metal. It trades about -0.2 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.15 per unit of risk. If you would invest 866,000 in Dongil Metal Co on August 29, 2024 and sell it today you would lose (26,000) from holding Dongil Metal Co or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongil Metal Co vs. Dongwon Metal Co
Performance |
| Timeline |
| Dongil Metal |
| Dongwon Metal |
Dongil Metal and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Dongwon Metal
The main advantage of trading using opposite Dongil Metal and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal 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.| Dongil Metal vs. LG Chemicals | Dongil Metal vs. POSCO Holdings | Dongil Metal vs. Hanwha Solutions | Dongil Metal vs. Lotte Chemical Corp |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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