Correlation Between ITM Semiconductor and Dongwon System

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

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

Diversification Opportunities for ITM Semiconductor and Dongwon System

0.72

Correlation Coefficient

ITM Semiconductor  Dongwon System

Poor diversification

The 3 months correlation between ITM and Dongwon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and ITM Semiconductor 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 ITM Semiconductor Co are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and Dongwon System go up and down completely randomly.

Pair Corralation between ITM Semiconductor and Dongwon System

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to generate 1.16 times more return on investment than Dongwon System. However, ITM Semiconductor is 1.16 times more volatile than Dongwon System. It trades about -0.05 of its potential returns per unit of risk. Dongwon System is currently generating about -0.1 per unit of risk. If you would invest  1,275,000  in ITM Semiconductor Co on December 30, 2024 and sell it today you would lose (123,000) from holding ITM Semiconductor Co or give up 9.65% of portfolio value over 90 days.

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

ITM Semiconductor Co  vs.  Dongwon System

ITM Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITM Semiconductor Co 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.

Dongwon System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongwon System 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ITM Semiconductor and Dongwon System

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

The idea behind ITM Semiconductor Co and Dongwon System 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.