Correlation Between Dawonsys CoLtd and MEDICOX

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

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

Diversification Opportunities for Dawonsys CoLtd and MEDICOX

0.43

Correlation Coefficient

Dawonsys CoLtd  MEDICOX

Very weak diversification

The 3 months correlation between Dawonsys and MEDICOX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dawonsys CoLtd and MEDICOX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICOX and Dawonsys CoLtd 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 Dawonsys CoLtd are associated (or correlated) with MEDICOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICOX has no effect on the direction of Dawonsys CoLtd i.e., Dawonsys CoLtd and MEDICOX go up and down completely randomly.

Pair Corralation between Dawonsys CoLtd and MEDICOX

Assuming the 90 days trading horizon Dawonsys CoLtd is expected to generate 0.47 times more return on investment than MEDICOX. However, Dawonsys CoLtd is 2.14 times less risky than MEDICOX. It trades about -0.04 of its potential returns per unit of risk. MEDICOX Co is currently generating about -0.05 per unit of risk. If you would invest  1,061,000  in Dawonsys CoLtd on September 15, 2024 and sell it today you would lose (93,000) from holding Dawonsys CoLtd or give up 8.77% of portfolio value over 90 days.

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

Dawonsys CoLtd  vs.  MEDICOX Co

Dawonsys CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dawonsys CoLtd 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.

MEDICOX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDICOX Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dawonsys CoLtd and MEDICOX

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

The idea behind Dawonsys CoLtd and MEDICOX 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.