Correlation Between Dongil Metal and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Jeju Semiconductor 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 Jeju Semiconductor 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 Jeju Semiconductor Corp, you can compare the effects of market volatilities on Dongil Metal and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Jeju Semiconductor.
Diversification Opportunities for Dongil Metal and Jeju Semiconductor
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongil and Jeju is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Dongil Metal i.e., Dongil Metal and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Dongil Metal and Jeju Semiconductor
Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 0.27 times more return on investment than Jeju Semiconductor. However, Dongil Metal Co is 3.68 times less risky than Jeju Semiconductor. It trades about -0.2 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.47 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongil Metal Co vs. Jeju Semiconductor Corp
Performance |
| Timeline |
| Dongil Metal |
| Jeju Semiconductor Corp |
Dongil Metal and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Jeju Semiconductor
The main advantage of trading using opposite Dongil Metal and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.| Dongil Metal vs. LG Chemicals | Dongil Metal vs. Lotte Chemical Corp | Dongil Metal vs. Hyundai Steel | Dongil Metal vs. Seah Steel Corp |
| Jeju Semiconductor vs. Korea Real Estate | Jeju Semiconductor vs. Korea Ratings Co | Jeju Semiconductor vs. IQuest Co | Jeju Semiconductor 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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