Correlation Between Dongwon System and ATON

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

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

Diversification Opportunities for Dongwon System and ATON

-0.56

Correlation Coefficient

Dongwon System  ATON

Excellent diversification

The 3 months correlation between Dongwon and ATON is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of Dongwon System i.e., Dongwon System and ATON go up and down completely randomly.

Pair Corralation between Dongwon System and ATON

Assuming the 90 days trading horizon Dongwon System is expected to under-perform the ATON. But the stock apears to be less risky and, when comparing its historical volatility, Dongwon System is 3.03 times less risky than ATON. The stock trades about -0.1 of its potential returns per unit of risk. The ATON Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  415,239  in ATON Inc on October 11, 2024 and sell it today you would earn a total of  309,761  from holding ATON Inc or generate 74.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

Dongwon System  vs.  ATON Inc

Dongwon System

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ATON Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongwon System and ATON

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

The idea behind Dongwon System and ATON Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.