Correlation Between Dong A and EASY HOLDINGS

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

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

Diversification Opportunities for Dong A and EASY HOLDINGS

-0.5

Correlation Coefficient

Dong A  EASY HOLDINGS

Very good diversification

The 3 months correlation between Dong and EASY is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and EASY HOLDINGS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EASY HOLDINGS and Dong A 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 Dong A Eltek are associated (or correlated) with EASY HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EASY HOLDINGS has no effect on the direction of Dong A i.e., Dong A and EASY HOLDINGS go up and down completely randomly.

Pair Corralation between Dong A and EASY HOLDINGS

Assuming the 90 days trading horizon Dong A is expected to generate 1.21 times less return on investment than EASY HOLDINGS. In addition to that, Dong A is 1.06 times more volatile than EASY HOLDINGS Co. It trades about 0.11 of its total potential returns per unit of risk. EASY HOLDINGS Co is currently generating about 0.14 per unit of volatility. If you would invest  266,000  in EASY HOLDINGS Co on October 8, 2024 and sell it today you would earn a total of  15,000  from holding EASY HOLDINGS Co or generate 5.64% return on investment over 90 days.

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

Dong A Eltek  vs.  EASY HOLDINGS Co

Dong A Eltek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dong A Eltek 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EASY HOLDINGS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EASY HOLDINGS Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EASY HOLDINGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dong A and EASY HOLDINGS

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

The idea behind Dong A Eltek and EASY HOLDINGS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.