Correlation Between Dongkuk Structures and TL

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

Diversification Opportunities for Dongkuk Structures and TL

-0.57

Correlation Coefficient

Dongkuk Structures  TL

Excellent diversification

The 3 months correlation between Dongkuk and TL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and TL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TL Co 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 TL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TL Co has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and TL go up and down completely randomly.

Pair Corralation between Dongkuk Structures and TL

Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to under-perform the TL. But the stock apears to be less risky and, when comparing its historical volatility, Dongkuk Structures Construction is 1.85 times less risky than TL. The stock trades about -0.14 of its potential returns per unit of risk. The TL Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,690,000  in TL Co on December 30, 2024 and sell it today you would earn a total of  990,000  from holding TL Co or generate 14.8% return on investment over 90 days.

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

Dongkuk Structures Constructio  vs.  TL Co

Dongkuk Structures

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TL Co

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TL Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongkuk Structures and TL

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

The idea behind Dongkuk Structures Construction and TL 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.