Correlation Between Dong-A Steel and Playgram

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

By analyzing existing cross correlation between Dong A Steel Technology and Playgram Co, you can compare the effects of market volatilities on Dong-A Steel and Playgram 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 Dong-A Steel with a short position of Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong-A Steel and Playgram.

Diversification Opportunities for Dong-A Steel and Playgram

-0.14

Correlation Coefficient

Dong-A Steel  Playgram

Good diversification

The 3 months correlation between Dong-A and Playgram is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram and Dong-A Steel 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 Dong A Steel Technology are associated (or correlated) with Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Dong-A Steel i.e., Dong-A Steel and Playgram go up and down completely randomly.

Pair Corralation between Dong-A Steel and Playgram

Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 0.6 times more return on investment than Playgram. However, Dong A Steel Technology is 1.68 times less risky than Playgram. It trades about -0.02 of its potential returns per unit of risk. Playgram Co is currently generating about -0.01 per unit of risk. If you would invest  455,202  in Dong A Steel Technology on September 28, 2024 and sell it today you would lose (172,702) from holding Dong A Steel Technology or give up 37.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Dong A Steel Technology  vs.  Playgram Co

Dong A Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dong A Steel Technology 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.

Playgram

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Dong-A Steel and Playgram

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

The idea behind Dong A Steel Technology and Playgram 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.