Correlation Between DRB Industrial and Dong A
Can any of the company-specific risk be diversified away by investing in both DRB 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 DRB 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 DRB Industrial Co and Dong A Steel Technology, you can compare the effects of market volatilities on DRB 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 DRB Industrial with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRB Industrial and Dong A.
Diversification Opportunities for DRB Industrial and Dong A
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DRB and Dong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding DRB 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 DRB 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 DRB 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 DRB Industrial i.e., DRB Industrial and Dong A go up and down completely randomly.
Pair Corralation between DRB Industrial and Dong A
Assuming the 90 days trading horizon DRB Industrial is expected to generate 1.1 times less return on investment than Dong A. In addition to that, DRB Industrial is 1.21 times more volatile than Dong A Steel Technology. It trades about 0.23 of its total potential returns per unit of risk. Dong A Steel Technology is currently generating about 0.3 per unit of volatility. If you would invest 277,483 in Dong A Steel Technology on October 11, 2024 and sell it today you would earn a total of 28,517 from holding Dong A Steel Technology or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRB Industrial Co vs. Dong A Steel Technology
Performance |
| Timeline |
| DRB Industrial |
| Dong A Steel |
DRB Industrial and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRB Industrial and Dong A
The main advantage of trading using opposite DRB Industrial and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRB 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.| DRB Industrial vs. Lotte Chilsung Beverage | DRB Industrial vs. Seoyon Topmetal Co | DRB Industrial vs. Kukil Metal Co | DRB Industrial vs. Nable Communications |
| Dong A vs. KMH Hitech Co | Dong A vs. PNC Technologies co | Dong A vs. SEOWONINTECHCoLtd | Dong A vs. Sungchang Autotech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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