Correlation Between Green Cross and Dong-A Steel
Can any of the company-specific risk be diversified away by investing in both Green Cross and Dong-A Steel 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 Green Cross and Dong-A Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and Dong A Steel Technology, you can compare the effects of market volatilities on Green Cross and Dong-A Steel 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 Green Cross with a short position of Dong-A Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and Dong-A Steel.
Diversification Opportunities for Green Cross and Dong-A Steel
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Green and Dong-A is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical 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 Green Cross 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 Green Cross Medical are associated (or correlated) with Dong-A Steel. 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 Green Cross i.e., Green Cross and Dong-A Steel go up and down completely randomly.
Pair Corralation between Green Cross and Dong-A Steel
Assuming the 90 days trading horizon Green Cross Medical is expected to generate 1.25 times more return on investment than Dong-A Steel. However, Green Cross is 1.25 times more volatile than Dong A Steel Technology. It trades about 0.0 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about -0.02 per unit of risk. If you would invest 510,000 in Green Cross Medical on November 27, 2024 and sell it today you would lose (118,500) from holding Green Cross Medical or give up 23.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Medical vs. Dong A Steel Technology
Performance |
| Timeline |
| Green Cross Medical |
| Dong A Steel |
Green Cross and Dong-A Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and Dong-A Steel
The main advantage of trading using opposite Green Cross and Dong-A Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, Dong-A Steel 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 Steel will offset losses from the drop in Dong-A Steel's long position.| Green Cross vs. Iljin Materials Co | Green Cross vs. Hyosung Advanced Materials | Green Cross vs. National Plastic Co | Green Cross vs. LAKE MATERIALS LTD |
| Dong-A Steel vs. DB Financial Investment | Dong-A Steel vs. Sangsangin Investment Securities | Dong-A Steel vs. SBI Investment KOREA | Dong-A Steel vs. Eugene Investment Securities |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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