Correlation Between Dongkuk Structures and Naver

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

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

Diversification Opportunities for Dongkuk Structures and Naver

-0.59

Correlation Coefficient

Dongkuk Structures  Naver

Excellent diversification

The 3 months correlation between Dongkuk and Naver is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Dongkuk Structures 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 Dongkuk Structures Construction are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and Naver go up and down completely randomly.

Pair Corralation between Dongkuk Structures and Naver

Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to generate 1.49 times more return on investment than Naver. However, Dongkuk Structures is 1.49 times more volatile than Naver. It trades about 0.18 of its potential returns per unit of risk. Naver is currently generating about -0.02 per unit of risk. If you would invest  227,500  in Dongkuk Structures Construction on October 6, 2024 and sell it today you would earn a total of  26,000  from holding Dongkuk Structures Construction or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Dongkuk Structures Constructio  vs.  Naver

Dongkuk Structures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongkuk Structures Construction 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.

Naver

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Naver sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongkuk Structures and Naver

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

The idea behind Dongkuk Structures Construction and Naver 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.