Correlation Between Dongil Technology and WONIK Materials

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

By analyzing existing cross correlation between Dongil Technology and WONIK Materials CoLtd, you can compare the effects of market volatilities on Dongil Technology and WONIK Materials 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 Dongil Technology with a short position of WONIK Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Technology and WONIK Materials.

Diversification Opportunities for Dongil Technology and WONIK Materials

0.76

Correlation Coefficient

Dongil Technology  WONIK Materials

Poor diversification

The 3 months correlation between Dongil and WONIK is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Technology and WONIK Materials CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WONIK Materials CoLtd and Dongil Technology 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 Dongil Technology are associated (or correlated) with WONIK Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WONIK Materials CoLtd has no effect on the direction of Dongil Technology i.e., Dongil Technology and WONIK Materials go up and down completely randomly.

Pair Corralation between Dongil Technology and WONIK Materials

Assuming the 90 days trading horizon Dongil Technology is expected to under-perform the WONIK Materials. But the stock apears to be less risky and, when comparing its historical volatility, Dongil Technology is 2.04 times less risky than WONIK Materials. The stock trades about -0.04 of its potential returns per unit of risk. The WONIK Materials CoLtd is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,755,653  in WONIK Materials CoLtd on October 25, 2024 and sell it today you would earn a total of  151,347  from holding WONIK Materials CoLtd or generate 8.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Dongil Technology  vs.  WONIK Materials CoLtd

Dongil Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

WONIK Materials CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WONIK Materials CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dongil Technology and WONIK Materials

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

The idea behind Dongil Technology and WONIK Materials CoLtd 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.