Correlation Between Seojin Automotive and Dong A
Can any of the company-specific risk be diversified away by investing in both Seojin Automotive and Dong A 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 Seojin Automotive and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seojin Automotive CoLtd and Dong A Eltek, you can compare the effects of market volatilities on Seojin Automotive and Dong A 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 Seojin Automotive with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seojin Automotive and Dong A.
Diversification Opportunities for Seojin Automotive and Dong A
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seojin and Dong is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Seojin Automotive CoLtd and Dong A Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Eltek and Seojin Automotive 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 Seojin Automotive CoLtd are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Eltek has no effect on the direction of Seojin Automotive i.e., Seojin Automotive and Dong A go up and down completely randomly.
Pair Corralation between Seojin Automotive and Dong A
Assuming the 90 days trading horizon Seojin Automotive CoLtd is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Seojin Automotive CoLtd is 1.27 times less risky than Dong A. The stock trades about -0.31 of its potential returns per unit of risk. The Dong A Eltek is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 472,000 in Dong A Eltek on August 30, 2024 and sell it today you would lose (37,000) from holding Dong A Eltek or give up 7.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seojin Automotive CoLtd vs. Dong A Eltek
Performance |
| Timeline |
| Seojin Automotive CoLtd |
| Dong A Eltek |
Seojin Automotive and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seojin Automotive and Dong A
The main advantage of trading using opposite Seojin Automotive and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seojin Automotive position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Seojin Automotive vs. KMH Hitech Co | Seojin Automotive vs. GemVaxKAEL CoLtd | Seojin Automotive vs. Busan Industrial Co | Seojin Automotive vs. Busan Ind |
| Dong A vs. DataSolution | Dong A vs. Lotte Data Communication | Dong A vs. Hankuk Steel Wire | Dong A vs. Shinsegae Information Communication |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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