Correlation Between Dong A and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Dong A and Finebesteel 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 and Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on Dong A and Finebesteel 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 with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Finebesteel.
Diversification Opportunities for Dong A and Finebesteel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dong and Finebesteel is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Dong A 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Dong A i.e., Dong A and Finebesteel go up and down completely randomly.
Pair Corralation between Dong A and Finebesteel
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Finebesteel. In addition to that, Dong A is 1.1 times more volatile than Finebesteel. It trades about -0.02 of its total potential returns per unit of risk. Finebesteel is currently generating about -0.02 per unit of volatility. If you would invest 114,600 in Finebesteel on October 8, 2024 and sell it today you would lose (22,000) from holding Finebesteel or give up 19.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dong A Steel Technology vs. Finebesteel
Performance |
Timeline |
Dong A Steel |
Finebesteel |
Dong A and Finebesteel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dong A and Finebesteel
The main advantage of trading using opposite Dong A and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.Dong A vs. Anam Electronics Co | Dong A vs. Samji Electronics Co | Dong A vs. Okins Electronics Co | Dong A vs. SH Energy Chemical |
Finebesteel vs. Display Tech Co | Finebesteel vs. LG Display Co | Finebesteel vs. Aprogen Healthcare Games | Finebesteel vs. Grand Korea Leisure |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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