Correlation Between Yura Tech and Dongwon System

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

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

Diversification Opportunities for Yura Tech and Dongwon System

0.18

Correlation Coefficient

Yura Tech  Dongwon System

Average diversification

The 3 months correlation between Yura and Dongwon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Yura Tech Co and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and Yura Tech 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 Yura Tech Co are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of Yura Tech i.e., Yura Tech and Dongwon System go up and down completely randomly.

Pair Corralation between Yura Tech and Dongwon System

Assuming the 90 days trading horizon Yura Tech Co is expected to generate 0.53 times more return on investment than Dongwon System. However, Yura Tech Co is 1.87 times less risky than Dongwon System. It trades about 0.15 of its potential returns per unit of risk. Dongwon System is currently generating about 0.03 per unit of risk. If you would invest  650,000  in Yura Tech Co on September 15, 2024 and sell it today you would earn a total of  100,000  from holding Yura Tech Co or generate 15.38% return on investment over 90 days.

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

Yura Tech Co  vs.  Dongwon System

Yura Tech

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yura Tech Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yura Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Dongwon System

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongwon System are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongwon System is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yura Tech and Dongwon System

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

The idea behind Yura Tech Co and Dongwon System 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.