Correlation Between Formetal and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Formetal and Dongil Metal 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 Formetal and Dongil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Dongil Metal Co, you can compare the effects of market volatilities on Formetal and Dongil Metal 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 Formetal with a short position of Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Dongil Metal.
Diversification Opportunities for Formetal and Dongil Metal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formetal and Dongil is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and Formetal 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 Formetal Co are associated (or correlated) with Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Formetal i.e., Formetal and Dongil Metal go up and down completely randomly.
Pair Corralation between Formetal and Dongil Metal
Assuming the 90 days trading horizon Formetal Co is expected to generate 3.87 times more return on investment than Dongil Metal. However, Formetal is 3.87 times more volatile than Dongil Metal Co. It trades about 0.23 of its potential returns per unit of risk. Dongil Metal Co is currently generating about -0.1 per unit of risk. If you would invest 267,500 in Formetal Co on September 14, 2024 and sell it today you would earn a total of 71,000 from holding Formetal Co or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Dongil Metal Co
Performance |
| Timeline |
| Formetal |
| Dongil Metal |
Formetal and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Dongil Metal
The main advantage of trading using opposite Formetal and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Dongil Metal 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 Dongil Metal will offset losses from the drop in Dongil Metal's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
| Dongil Metal vs. LG Chemicals | Dongil Metal vs. POSCO Holdings | Dongil Metal vs. Hanwha Solutions | Dongil Metal vs. Lotte Chemical Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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