Correlation Between Aprogen KIC and Dong A

Can any of the company-specific risk be diversified away by investing in both Aprogen KIC 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 Aprogen KIC and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aprogen KIC and Dong A Steel Technology, you can compare the effects of market volatilities on Aprogen KIC 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 Aprogen KIC with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aprogen KIC and Dong A.

Diversification Opportunities for Aprogen KIC and Dong A

0.6

Correlation Coefficient

Aprogen KIC  Dong A

Poor diversification

The 3 months correlation between Aprogen and Dong is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aprogen KIC 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 Aprogen KIC 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 Aprogen KIC 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 Aprogen KIC i.e., Aprogen KIC and Dong A go up and down completely randomly.

Pair Corralation between Aprogen KIC and Dong A

Assuming the 90 days trading horizon Aprogen KIC is expected to generate 1.98 times more return on investment than Dong A. However, Aprogen KIC is 1.98 times more volatile than Dong A Steel Technology. It trades about -0.01 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about -0.03 per unit of risk. If you would invest  171,566  in Aprogen KIC on October 4, 2024 and sell it today you would lose (93,966) from holding Aprogen KIC or give up 54.77% of portfolio value over 90 days.

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

Aprogen KIC  vs.  Dong A Steel Technology

Aprogen KIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aprogen KIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dong A Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dong A Steel Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dong A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aprogen KIC and Dong A

The main advantage of trading using opposite Aprogen KIC and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aprogen KIC 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 Aprogen KIC 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.