Correlation Between Dong A and KSD
Can any of the company-specific risk be diversified away by investing in both Dong A and KSD 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 Dong A and KSD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Hotel and KSD, you can compare the effects of market volatilities on Dong A and KSD 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 Dong A with a short position of KSD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and KSD.
Diversification Opportunities for Dong A and KSD
Average diversification
The 3 months correlation between Dong and KSD is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and KSD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSD and Dong A 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 Dong A Hotel are associated (or correlated) with KSD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSD has no effect on the direction of Dong A i.e., Dong A and KSD go up and down completely randomly.
Pair Corralation between Dong A and KSD
Assuming the 90 days trading horizon Dong A Hotel is expected to under-perform the KSD. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Hotel is 2.14 times less risky than KSD. The stock trades about -0.08 of its potential returns per unit of risk. The KSD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 610,000 in KSD on September 12, 2024 and sell it today you would lose (110,000) from holding KSD or give up 18.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.29% |
| Values | Daily Returns |
Dong A Hotel vs. KSD
Performance |
| Timeline |
| Dong A Hotel |
| KSD |
Dong A and KSD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and KSD
The main advantage of trading using opposite Dong A and KSD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, KSD 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 KSD will offset losses from the drop in KSD's long position.| Dong A vs. Telecoms Informatics JSC | Dong A vs. POST TELECOMMU | Dong A vs. South Basic Chemicals | Dong A vs. Saigon Beer Alcohol |
| KSD vs. Pha Le Plastics | KSD vs. DOMESCO Medical Import | KSD vs. BIDV Insurance Corp | KSD vs. Dong A Hotel |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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