Correlation Between Insun Environment and Dongil Technology

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

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

Diversification Opportunities for Insun Environment and Dongil Technology

0.86

Correlation Coefficient

Insun Environment  Dongil Technology

Very poor diversification

The 3 months correlation between Insun and Dongil is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Insun Environment New and Dongil Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Technology and Insun Environment 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 Insun Environment New are associated (or correlated) with Dongil Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Technology has no effect on the direction of Insun Environment i.e., Insun Environment and Dongil Technology go up and down completely randomly.

Pair Corralation between Insun Environment and Dongil Technology

Assuming the 90 days trading horizon Insun Environment New is expected to under-perform the Dongil Technology. But the stock apears to be less risky and, when comparing its historical volatility, Insun Environment New is 1.43 times less risky than Dongil Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Dongil Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,298,557  in Dongil Technology on October 4, 2024 and sell it today you would lose (258,557) from holding Dongil Technology or give up 19.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.82%
Values	Daily Returns

Insun Environment New  vs.  Dongil Technology

Insun Environment New

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Insun Environment and Dongil Technology

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

The idea behind Insun Environment New and Dongil Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.