Correlation Between Dongil Metal and Chunbo
Can any of the company-specific risk be diversified away by investing in both Dongil Metal and Chunbo 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 Chunbo 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 Chunbo Co, you can compare the effects of market volatilities on Dongil Metal and Chunbo 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 Chunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Chunbo.
Diversification Opportunities for Dongil Metal and Chunbo
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongil and Chunbo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Chunbo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunbo 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 Chunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunbo has no effect on the direction of Dongil Metal i.e., Dongil Metal and Chunbo go up and down completely randomly.
Pair Corralation between Dongil Metal and Chunbo
Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 0.19 times more return on investment than Chunbo. However, Dongil Metal Co is 5.37 times less risky than Chunbo. It trades about -0.22 of its potential returns per unit of risk. Chunbo Co is currently generating about -0.13 per unit of risk. If you would invest 922,000 in Dongil Metal Co on August 28, 2024 and sell it today you would lose (82,000) from holding Dongil Metal Co or give up 8.89% 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. Chunbo Co
Performance |
| Timeline |
| Dongil Metal |
| Chunbo |
Dongil Metal and Chunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Chunbo
The main advantage of trading using opposite Dongil Metal and Chunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal position performs unexpectedly, Chunbo 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 Chunbo will offset losses from the drop in Chunbo'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 |
| Chunbo vs. Samlip General Foods | Chunbo vs. Hyundai Home Shopping | Chunbo vs. Sempio Foods Co | Chunbo vs. Digital Power 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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