Correlation Between Nable Communications and Dong A
Can any of the company-specific risk be diversified away by investing in both Nable Communications 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 Nable Communications and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and Dong A Steel Technology, you can compare the effects of market volatilities on Nable Communications 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 Nable Communications with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and Dong A.
Diversification Opportunities for Nable Communications and Dong A
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nable and Dong is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications 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 Nable Communications 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 Nable Communications 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 Nable Communications i.e., Nable Communications and Dong A go up and down completely randomly.
Pair Corralation between Nable Communications and Dong A
Assuming the 90 days trading horizon Nable Communications is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Nable Communications is 1.13 times less risky than Dong A. The stock trades about -0.1 of its potential returns per unit of risk. The Dong A Steel Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 290,500 in Dong A Steel Technology on November 3, 2024 and sell it today you would earn a total of 13,000 from holding Dong A Steel Technology or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nable Communications vs. Dong A Steel Technology
Performance |
| Timeline |
| Nable Communications |
| Dong A Steel |
Nable Communications and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nable Communications and Dong A
The main advantage of trading using opposite Nable Communications and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications 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.| Nable Communications vs. Sung Bo Chemicals | Nable Communications vs. Kukil Metal Co | Nable Communications vs. Jeju Beer Co | Nable Communications vs. PI Advanced Materials |
| Dong A vs. DataSolution | Dong A vs. Daou Data Corp | Dong A vs. Korea Information Communications | Dong A vs. ABOV Semiconductor Co |
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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