Correlation Between Lion Chemtech and Dongsuh
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Dongsuh 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 Lion Chemtech and Dongsuh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Dongsuh, you can compare the effects of market volatilities on Lion Chemtech and Dongsuh 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 Lion Chemtech with a short position of Dongsuh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Dongsuh.
Diversification Opportunities for Lion Chemtech and Dongsuh
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lion and Dongsuh is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Dongsuh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsuh and Lion Chemtech 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 Lion Chemtech Co are associated (or correlated) with Dongsuh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsuh has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Dongsuh go up and down completely randomly.
Pair Corralation between Lion Chemtech and Dongsuh
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the Dongsuh. But the stock apears to be less risky and, when comparing its historical volatility, Lion Chemtech Co is 1.47 times less risky than Dongsuh. The stock trades about -0.04 of its potential returns per unit of risk. The Dongsuh is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,768,836 in Dongsuh on September 5, 2024 and sell it today you would earn a total of 1,201,164 from holding Dongsuh or generate 67.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Dongsuh
Performance |
| Timeline |
| Lion Chemtech |
| Dongsuh |
Lion Chemtech and Dongsuh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Dongsuh
The main advantage of trading using opposite Lion Chemtech and Dongsuh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Dongsuh 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 Dongsuh will offset losses from the drop in Dongsuh's long position.The idea behind Lion Chemtech Co and Dongsuh pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dongsuh vs. Golden Bridge Investment | Dongsuh vs. NH Investment Securities | Dongsuh vs. Chorokbaem Healthcare Co | Dongsuh vs. Dongbang Transport Logistics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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