Correlation Between Dongil Metal and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Dongil Metal and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Daejung Chemicals.
Diversification Opportunities for Dongil Metal and Daejung Chemicals
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongil and Daejung is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Dongil Metal i.e., Dongil Metal and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Dongil Metal and Daejung Chemicals
Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 2.5 times more return on investment than Daejung Chemicals. However, Dongil Metal is 2.5 times more volatile than Daejung Chemicals Metals. It trades about 0.49 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about 0.15 per unit of risk. If you would invest 751,598 in Dongil Metal Co on October 22, 2024 and sell it today you would earn a total of 168,402 from holding Dongil Metal Co or generate 22.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongil Metal Co vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Dongil Metal |
| Daejung Chemicals Metals |
Dongil Metal and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Daejung Chemicals
The main advantage of trading using opposite Dongil Metal and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Dongil Metal vs. Hanil Iron Steel | Dongil Metal vs. Bookook Steel | Dongil Metal vs. Korea Steel Co | Dongil Metal vs. Dongbang Transport Logistics |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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