Correlation Between Dongwon System and Worldex Industry

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

By analyzing existing cross correlation between Dongwon System and Worldex Industry Trading, you can compare the effects of market volatilities on Dongwon System and Worldex Industry 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 Worldex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Worldex Industry.

Diversification Opportunities for Dongwon System and Worldex Industry

-0.3

Correlation Coefficient

Dongwon System  Worldex Industry

Very good diversification

The 3 months correlation between Dongwon and Worldex is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading 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 Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of Dongwon System i.e., Dongwon System and Worldex Industry go up and down completely randomly.

Pair Corralation between Dongwon System and Worldex Industry

Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Worldex Industry. In addition to that, Dongwon System is 1.11 times more volatile than Worldex Industry Trading. It trades about -0.1 of its total potential returns per unit of risk. Worldex Industry Trading is currently generating about 0.05 per unit of volatility. If you would invest  1,577,226  in Worldex Industry Trading on December 5, 2024 and sell it today you would earn a total of  76,774  from holding Worldex Industry Trading or generate 4.87% return on investment over 90 days.

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

Dongwon System  vs.  Worldex Industry Trading

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.

Worldex Industry Trading

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Worldex Industry Trading are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldex Industry may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dongwon System and Worldex Industry

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

The idea behind Dongwon System and Worldex Industry Trading 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.