Correlation Between Microfriend and DongWon Development
Can any of the company-specific risk be diversified away by investing in both Microfriend and DongWon Development 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 Microfriend and DongWon Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and DongWon Development CoLtd, you can compare the effects of market volatilities on Microfriend and DongWon Development 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 Microfriend with a short position of DongWon Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and DongWon Development.
Diversification Opportunities for Microfriend and DongWon Development
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microfriend and DongWon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and DongWon Development CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DongWon Development CoLtd and Microfriend 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 Microfriend are associated (or correlated) with DongWon Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DongWon Development CoLtd has no effect on the direction of Microfriend i.e., Microfriend and DongWon Development go up and down completely randomly.
Pair Corralation between Microfriend and DongWon Development
Assuming the 90 days trading horizon Microfriend is expected to under-perform the DongWon Development. In addition to that, Microfriend is 3.08 times more volatile than DongWon Development CoLtd. It trades about -0.07 of its total potential returns per unit of risk. DongWon Development CoLtd is currently generating about -0.17 per unit of volatility. If you would invest 237,967 in DongWon Development CoLtd on November 3, 2024 and sell it today you would lose (14,967) from holding DongWon Development CoLtd or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Microfriend vs. DongWon Development CoLtd
Performance |
| Timeline |
| Microfriend |
| DongWon Development CoLtd |
Microfriend and DongWon Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and DongWon Development
The main advantage of trading using opposite Microfriend and DongWon Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, DongWon Development 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 DongWon Development will offset losses from the drop in DongWon Development's long position.| Microfriend vs. Samyang Foods Co | Microfriend vs. KEPCO Engineering Construction | Microfriend vs. Daewoo Engineering Construction | Microfriend vs. Alton Sports CoLtd |
| DongWon Development vs. Busan Industrial Co | DongWon Development vs. Busan Ind | DongWon Development vs. Mirae Asset Daewoo | DongWon Development vs. Shinhan WTI Futures |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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