Correlation Between Dongkuk Structures and PlayD

Can any of the company-specific risk be diversified away by investing in both Dongkuk Structures and PlayD 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 PlayD 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 PlayD Co, you can compare the effects of market volatilities on Dongkuk Structures and PlayD 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 PlayD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Structures and PlayD.

Diversification Opportunities for Dongkuk Structures and PlayD

-0.21

Correlation Coefficient

Dongkuk Structures  PlayD

Very good diversification

The 3 months correlation between Dongkuk and PlayD is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and PlayD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayD 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 PlayD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayD has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and PlayD go up and down completely randomly.

Pair Corralation between Dongkuk Structures and PlayD

Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to under-perform the PlayD. But the stock apears to be less risky and, when comparing its historical volatility, Dongkuk Structures Construction is 1.15 times less risky than PlayD. The stock trades about -0.03 of its potential returns per unit of risk. The PlayD Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  609,000  in PlayD Co on October 9, 2024 and sell it today you would lose (12,000) from holding PlayD Co or give up 1.97% of portfolio value over 90 days.

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

Dongkuk Structures Constructio  vs.  PlayD Co

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 somewhat strong basic indicators, Dongkuk Structures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PlayD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dongkuk Structures and PlayD

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

The idea behind Dongkuk Structures Construction and PlayD 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.