Correlation Between ITM Semiconductor and Dong A

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

Diversification Opportunities for ITM Semiconductor and Dong A

-0.35

Correlation Coefficient

ITM Semiconductor  Dong A

Very good diversification

The 3 months correlation between ITM and Dong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel 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 Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and Dong A go up and down completely randomly.

Pair Corralation between ITM Semiconductor and Dong A

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the Dong A. In addition to that, ITM Semiconductor is 1.4 times more volatile than Dong A Steel Technology. It trades about -0.04 of its total potential returns per unit of risk. Dong A Steel Technology is currently generating about 0.03 per unit of volatility. If you would invest  283,274  in Dong A Steel Technology on December 23, 2024 and sell it today you would earn a total of  6,726  from holding Dong A Steel Technology or generate 2.37% return on investment over 90 days.

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

ITM Semiconductor Co  vs.  Dong A Steel Technology

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.

Dong A Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dong A Steel Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dong A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ITM Semiconductor and Dong A

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

The idea behind ITM Semiconductor Co and Dong A Steel 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.