Correlation Between Lindeman Asia and Dong A
Can any of the company-specific risk be diversified away by investing in both Lindeman Asia 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 Lindeman Asia and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and Dong A Steel Technology, you can compare the effects of market volatilities on Lindeman Asia 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 Lindeman Asia with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and Dong A.
Diversification Opportunities for Lindeman Asia and Dong A
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lindeman and Dong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment 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 Lindeman Asia 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 Lindeman Asia Investment 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 Lindeman Asia i.e., Lindeman Asia and Dong A go up and down completely randomly.
Pair Corralation between Lindeman Asia and Dong A
Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Lindeman Asia Investment is 1.3 times less risky than Dong A. The stock trades about -0.15 of its potential returns per unit of risk. The Dong A Steel Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 322,000 in Dong A Steel Technology on August 27, 2024 and sell it today you would earn a total of 30,500 from holding Dong A Steel Technology or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindeman Asia Investment vs. Dong A Steel Technology
Performance |
| Timeline |
| Lindeman Asia Investment |
| Dong A Steel |
Lindeman Asia and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindeman Asia and Dong A
The main advantage of trading using opposite Lindeman Asia and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia 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.The idea behind Lindeman Asia Investment and Dong A Steel Technology 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.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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