Correlation Between Dongil Metal and Pungguk Ethanol
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Pungguk Ethanol 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 Pungguk Ethanol 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 Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Dongil Metal and Pungguk Ethanol 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 Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Pungguk Ethanol.
Diversification Opportunities for Dongil Metal and Pungguk Ethanol
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongil and Pungguk is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu 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 Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Dongil Metal i.e., Dongil Metal and Pungguk Ethanol go up and down completely randomly.
Pair Corralation between Dongil Metal and Pungguk Ethanol
Assuming the 90 days trading horizon Dongil Metal Co is expected to under-perform the Pungguk Ethanol. But the stock apears to be less risky and, when comparing its historical volatility, Dongil Metal Co is 1.02 times less risky than Pungguk Ethanol. The stock trades about -0.31 of its potential returns per unit of risk. The Pungguk Ethanol Industrial is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,007,000 in Pungguk Ethanol Industrial on September 2, 2024 and sell it today you would lose (20,000) from holding Pungguk Ethanol Industrial or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongil Metal Co vs. Pungguk Ethanol Industrial
Performance |
| Timeline |
| Dongil Metal |
| Pungguk Ethanol Indu |
Dongil Metal and Pungguk Ethanol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Pungguk Ethanol
The main advantage of trading using opposite Dongil Metal and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.| Dongil Metal vs. LG Chemicals | Dongil Metal vs. POSCO Holdings | Dongil Metal vs. Hanwha Solutions | Dongil Metal vs. Hyundai Steel |
| Pungguk Ethanol vs. Korea Real Estate | Pungguk Ethanol vs. Korea Ratings Co | Pungguk Ethanol vs. IQuest Co | Pungguk Ethanol vs. Wonbang Tech Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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