Correlation Between Dongil Metal and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Dongil Metal and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Namhwa Industrial.
Diversification Opportunities for Dongil Metal and Namhwa Industrial
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongil and Namhwa is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Dongil Metal i.e., Dongil Metal and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Dongil Metal and Namhwa Industrial
Assuming the 90 days trading horizon Dongil Metal Co is expected to under-perform the Namhwa Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Dongil Metal Co is 2.62 times less risky than Namhwa Industrial. The stock trades about -0.2 of its potential returns per unit of risk. The Namhwa Industrial Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 534,000 in Namhwa Industrial Co on August 28, 2024 and sell it today you would earn a total of 6,000 from holding Namhwa Industrial Co or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dongil Metal Co vs. Namhwa Industrial Co
Performance |
| Timeline |
| Dongil Metal |
| Namhwa Industrial |
Dongil Metal and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Namhwa Industrial
The main advantage of trading using opposite Dongil Metal and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial'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 |
| Namhwa Industrial vs. Tway Air Co | Namhwa Industrial vs. Air Busan Co | Namhwa Industrial vs. Daejoo Electronic Materials | Namhwa Industrial vs. Daeduck Electronics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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