Correlation Between Dongwon System and Total Soft

Can any of the company-specific risk be diversified away by investing in both Dongwon System and Total Soft 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 Dongwon System and Total Soft into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongwon System and Total Soft Bank, you can compare the effects of market volatilities on Dongwon System and Total Soft 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 Dongwon System with a short position of Total Soft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Total Soft.

Diversification Opportunities for Dongwon System and Total Soft

0.61

Correlation Coefficient

Dongwon System  Total Soft

Poor diversification

The 3 months correlation between Dongwon and Total is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Total Soft Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Soft Bank and Dongwon System 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 Dongwon System are associated (or correlated) with Total Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Soft Bank has no effect on the direction of Dongwon System i.e., Dongwon System and Total Soft go up and down completely randomly.

Pair Corralation between Dongwon System and Total Soft

Assuming the 90 days trading horizon Dongwon System is expected to generate 0.6 times more return on investment than Total Soft. However, Dongwon System is 1.66 times less risky than Total Soft. It trades about -0.1 of its potential returns per unit of risk. Total Soft Bank is currently generating about -0.1 per unit of risk. If you would invest  4,215,000  in Dongwon System on December 24, 2024 and sell it today you would lose (595,000) from holding Dongwon System or give up 14.12% of portfolio value over 90 days.

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

Dongwon System  vs.  Total Soft Bank

Dongwon System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongwon System 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Total Soft Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Total Soft Bank 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dongwon System and Total Soft

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

The idea behind Dongwon System and Total Soft Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.