Correlation Between Dong-A Steel and NEOWIZ HOLDINGS

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Can any of the company-specific risk be diversified away by investing in both Dong-A Steel and NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS, you can compare the effects of market volatilities on Dong-A Steel and NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong-A Steel and NEOWIZ HOLDINGS.

Diversification Opportunities for Dong-A Steel and NEOWIZ HOLDINGS

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Dong-A and NEOWIZ is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and NEOWIZ HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEOWIZ HOLDINGS has no effect on the direction of Dong-A Steel i.e., Dong-A Steel and NEOWIZ HOLDINGS go up and down completely randomly.

Pair Corralation between Dong-A Steel and NEOWIZ HOLDINGS

Assuming the 90 days trading horizon Dong-A Steel is expected to generate 11.02 times less return on investment than NEOWIZ HOLDINGS. But when comparing it to its historical volatility, Dong A Steel Technology is 1.28 times less risky than NEOWIZ HOLDINGS. It trades about 0.01 of its potential returns per unit of risk. NEOWIZ HOLDINGS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,882,000  in NEOWIZ HOLDINGS on September 18, 2024 and sell it today you would earn a total of  293,000  from holding NEOWIZ HOLDINGS or generate 15.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.36%
ValuesDaily Returns

Dong A Steel Technology  vs.  NEOWIZ HOLDINGS

 Performance 
       Timeline  
Dong A Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 somewhat strong basic indicators, Dong-A Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
NEOWIZ HOLDINGS 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NEOWIZ HOLDINGS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NEOWIZ HOLDINGS sustained solid returns over the last few months and may actually be approaching a breakup point.

Dong-A Steel and NEOWIZ HOLDINGS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dong-A Steel and NEOWIZ HOLDINGS

The main advantage of trading using opposite Dong-A Steel and NEOWIZ HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong-A Steel position performs unexpectedly, NEOWIZ HOLDINGS 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 NEOWIZ HOLDINGS will offset losses from the drop in NEOWIZ HOLDINGS's long position.
The idea behind Dong A Steel Technology and NEOWIZ HOLDINGS 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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