Correlation Between Dongjin Semichem and Kg Chemical

Can any of the company-specific risk be diversified away by investing in both Dongjin Semichem and Kg Chemical 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 Dongjin Semichem and Kg Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongjin Semichem Co and Kg Chemical, you can compare the effects of market volatilities on Dongjin Semichem and Kg Chemical 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 Dongjin Semichem with a short position of Kg Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongjin Semichem and Kg Chemical.

Diversification Opportunities for Dongjin Semichem and Kg Chemical

0.39

Correlation Coefficient

Dongjin Semichem  Kg Chemical

Weak diversification

The 3 months correlation between Dongjin and 001390 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dongjin Semichem Co and Kg Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kg Chemical and Dongjin Semichem 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 Dongjin Semichem Co are associated (or correlated) with Kg Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kg Chemical has no effect on the direction of Dongjin Semichem i.e., Dongjin Semichem and Kg Chemical go up and down completely randomly.

Pair Corralation between Dongjin Semichem and Kg Chemical

Assuming the 90 days trading horizon Dongjin Semichem Co is expected to under-perform the Kg Chemical. In addition to that, Dongjin Semichem is 1.3 times more volatile than Kg Chemical. It trades about -0.05 of its total potential returns per unit of risk. Kg Chemical is currently generating about 0.01 per unit of volatility. If you would invest  384,885  in Kg Chemical on October 22, 2024 and sell it today you would earn a total of  1,615  from holding Kg Chemical or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dongjin Semichem Co  vs.  Kg Chemical

Dongjin Semichem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongjin Semichem Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kg Chemical

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kg Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kg Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dongjin Semichem and Kg Chemical

The main advantage of trading using opposite Dongjin Semichem and Kg Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongjin Semichem position performs unexpectedly, Kg Chemical 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 Kg Chemical will offset losses from the drop in Kg Chemical's long position.

The idea behind Dongjin Semichem Co and Kg Chemical 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.