Correlation Between CU Medical and Dongwon System
Can any of the company-specific risk be diversified away by investing in both CU Medical and Dongwon System 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 CU Medical and Dongwon System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Medical Systems and Dongwon System, you can compare the effects of market volatilities on CU Medical and Dongwon System 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 CU Medical with a short position of Dongwon System. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and Dongwon System.
Diversification Opportunities for CU Medical and Dongwon System
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 115480 and Dongwon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and CU Medical 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 CU Medical Systems are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of CU Medical i.e., CU Medical and Dongwon System go up and down completely randomly.
Pair Corralation between CU Medical and Dongwon System
Assuming the 90 days trading horizon CU Medical Systems is expected to under-perform the Dongwon System. But the stock apears to be less risky and, when comparing its historical volatility, CU Medical Systems is 1.75 times less risky than Dongwon System. The stock trades about -0.21 of its potential returns per unit of risk. The Dongwon System is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,415,000 in Dongwon System on September 14, 2024 and sell it today you would lose (105,000) from holding Dongwon System or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Medical Systems vs. Dongwon System
Performance |
| Timeline |
| CU Medical Systems |
| Dongwon System |
CU Medical and Dongwon System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Medical and Dongwon System
The main advantage of trading using opposite CU Medical and Dongwon System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Medical position performs unexpectedly, Dongwon System 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 Dongwon System will offset losses from the drop in Dongwon System's long position.| CU Medical vs. Samsung Electronics Co | CU Medical vs. Samsung Electronics Co | CU Medical vs. SK Hynix | CU Medical vs. SK Holdings Co |
| Dongwon System vs. DSC Investment | Dongwon System vs. Jeju Air Co | Dongwon System vs. Woori Technology Investment | Dongwon System vs. CU Medical Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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