Correlation Between Dongwoo Farm and Camus Engineering

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

By analyzing existing cross correlation between Dongwoo Farm To and Camus Engineering Construction, you can compare the effects of market volatilities on Dongwoo Farm and Camus Engineering 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 Dongwoo Farm with a short position of Camus Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Camus Engineering.

Diversification Opportunities for Dongwoo Farm and Camus Engineering

0.47

Correlation Coefficient

Dongwoo Farm  Camus Engineering

Very weak diversification

The 3 months correlation between Dongwoo and Camus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Camus Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camus Engineering and Dongwoo Farm 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 Dongwoo Farm To are associated (or correlated) with Camus Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camus Engineering has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Camus Engineering go up and down completely randomly.

Pair Corralation between Dongwoo Farm and Camus Engineering

Assuming the 90 days trading horizon Dongwoo Farm is expected to generate 10.65 times less return on investment than Camus Engineering. But when comparing it to its historical volatility, Dongwoo Farm To is 2.18 times less risky than Camus Engineering. It trades about 0.03 of its potential returns per unit of risk. Camus Engineering Construction is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  122,900  in Camus Engineering Construction on September 18, 2024 and sell it today you would earn a total of  14,200  from holding Camus Engineering Construction or generate 11.55% return on investment over 90 days.

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

Dongwoo Farm To  vs.  Camus Engineering Construction

Dongwoo Farm To

Risk-Adjusted Performance

0 of 100

Very Weak

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

Camus Engineering

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Dongwoo Farm and Camus Engineering

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

The idea behind Dongwoo Farm To and Camus Engineering Construction 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.