Correlation Between Daesung Industrial and Dong A
Can any of the company-specific risk be diversified away by investing in both Daesung Industrial 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 Daesung Industrial and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Industrial Co and Dong A Steel Technology, you can compare the effects of market volatilities on Daesung Industrial 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 Daesung Industrial with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Industrial and Dong A.
Diversification Opportunities for Daesung Industrial and Dong A
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daesung and Dong is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Industrial Co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel and Daesung Industrial 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 Daesung Industrial Co 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 Steel has no effect on the direction of Daesung Industrial i.e., Daesung Industrial and Dong A go up and down completely randomly.
Pair Corralation between Daesung Industrial and Dong A
Assuming the 90 days trading horizon Daesung Industrial Co is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Daesung Industrial Co is 1.33 times less risky than Dong A. The stock trades about -0.12 of its potential returns per unit of risk. The Dong A Steel Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 297,000 in Dong A Steel Technology on November 7, 2024 and sell it today you would earn a total of 6,500 from holding Dong A Steel Technology or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Industrial Co vs. Dong A Steel Technology
Performance |
| Timeline |
| Daesung Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dong A Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Daesung Industrial and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Industrial and Dong A
The main advantage of trading using opposite Daesung Industrial and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Industrial 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.| Daesung Industrial vs. Samsung Publishing Co | Daesung Industrial vs. Narae Nanotech Corp | Daesung Industrial vs. Choil Aluminum | Daesung Industrial vs. Wonbang Tech Co |
| Dong A vs. Korea Petro Chemical | Dong A vs. Shinhan Inverse Copper | Dong A vs. SH Energy Chemical | Dong A vs. Namhae Chemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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