Correlation Between Daejung Chemicals and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and Dongil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Dongil Metal Co, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Dongil Metal.
Diversification Opportunities for Daejung Chemicals and Dongil Metal
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daejung and Dongil is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and Dongil Metal go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Dongil Metal
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Dongil Metal. In addition to that, Daejung Chemicals is 2.53 times more volatile than Dongil Metal Co. It trades about -0.18 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about -0.2 per unit of volatility. If you would invest 862,000 in Dongil Metal Co on August 25, 2024 and sell it today you would lose (26,000) from holding Dongil Metal Co or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Dongil Metal Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Dongil Metal |
Daejung Chemicals and Dongil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Dongil Metal
The main advantage of trading using opposite Daejung Chemicals and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC | Daejung Chemicals vs. Sukgyung AT Co |
| Dongil Metal vs. LG Chemicals | Dongil Metal vs. POSCO Holdings | Dongil Metal vs. Lotte Chemical Corp | Dongil Metal vs. Hyundai Steel |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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