Correlation Between NewFlex Technology and Dongil Metal

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

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

Diversification Opportunities for NewFlex Technology and Dongil Metal

0.44

Correlation Coefficient

NewFlex Technology  Dongil Metal

Very weak diversification

The 3 months correlation between NewFlex and Dongil is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and NewFlex Technology 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 NewFlex Technology Co are associated (or correlated) with Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and Dongil Metal go up and down completely randomly.

Pair Corralation between NewFlex Technology and Dongil Metal

Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the Dongil Metal. In addition to that, NewFlex Technology is 2.42 times more volatile than Dongil Metal Co. It trades about -0.02 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about 0.1 per unit of volatility. If you would invest  822,862  in Dongil Metal Co on October 26, 2024 and sell it today you would earn a total of  80,138  from holding Dongil Metal Co or generate 9.74% return on investment over 90 days.

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

NewFlex Technology Co  vs.  Dongil Metal Co

NewFlex Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dongil Metal

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dongil Metal Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongil Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NewFlex Technology and Dongil Metal

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

The idea behind NewFlex Technology Co and Dongil Metal 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 Transaction History module to view history of all your transactions and understand their impact on performance.