Correlation Between Top Material and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Top Material and Dongwoo Farm 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 Top Material and Dongwoo Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Dongwoo Farm To, you can compare the effects of market volatilities on Top Material and Dongwoo Farm 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 Top Material with a short position of Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Dongwoo Farm.
Diversification Opportunities for Top Material and Dongwoo Farm
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Top and Dongwoo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To and Top Material 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 Top Material Co are associated (or correlated) with Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Top Material i.e., Top Material and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Top Material and Dongwoo Farm
Assuming the 90 days trading horizon Top Material Co is expected to under-perform the Dongwoo Farm. In addition to that, Top Material is 2.72 times more volatile than Dongwoo Farm To. It trades about -0.41 of its total potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.19 per unit of volatility. If you would invest 195,700 in Dongwoo Farm To on November 5, 2024 and sell it today you would lose (6,700) from holding Dongwoo Farm To or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Dongwoo Farm To
Performance |
| Timeline |
| Top Material |
| Dongwoo Farm To |
Top Material and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Dongwoo Farm
The main advantage of trading using opposite Top Material and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Top Material vs. FoodNamoo | Top Material vs. Settlebank | Top Material vs. Shinsegae Food | Top Material vs. Haitai Confectionery Foods |
| Dongwoo Farm vs. Mobile Appliance | Dongwoo Farm vs. Korea Air Svc | Dongwoo Farm vs. Nice Information Telecommunication | Dongwoo Farm vs. Automobile Pc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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