Correlation Between Dongwon System and LX Semicon

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

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

Diversification Opportunities for Dongwon System and LX Semicon

0.43

Correlation Coefficient

Dongwon System  LX Semicon

Very weak diversification

The 3 months correlation between Dongwon and 108320 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and LX Semicon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LX Semicon 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 LX Semicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LX Semicon has no effect on the direction of Dongwon System i.e., Dongwon System and LX Semicon go up and down completely randomly.

Pair Corralation between Dongwon System and LX Semicon

Assuming the 90 days trading horizon Dongwon System is expected to under-perform the LX Semicon. In addition to that, Dongwon System is 1.06 times more volatile than LX Semicon Co. It trades about -0.05 of its total potential returns per unit of risk. LX Semicon Co is currently generating about 0.0 per unit of volatility. If you would invest  5,880,000  in LX Semicon Co on September 20, 2024 and sell it today you would lose (50,000) from holding LX Semicon Co or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Dongwon System  vs.  LX Semicon Co

Dongwon System

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongwon System are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongwon System may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LX Semicon

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dongwon System and LX Semicon

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

The idea behind Dongwon System and LX Semicon Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.