Correlation Between Dongil Metal and Celltrion

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

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

Diversification Opportunities for Dongil Metal and Celltrion

0.4

Correlation Coefficient

Dongil Metal  Celltrion

Very weak diversification

The 3 months correlation between Dongil and Celltrion is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Celltrion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion and Dongil Metal 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 Dongil Metal Co are associated (or correlated) with Celltrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion has no effect on the direction of Dongil Metal i.e., Dongil Metal and Celltrion go up and down completely randomly.

Pair Corralation between Dongil Metal and Celltrion

Assuming the 90 days trading horizon Dongil Metal Co is expected to under-perform the Celltrion. But the stock apears to be less risky and, when comparing its historical volatility, Dongil Metal Co is 2.09 times less risky than Celltrion. The stock trades about -0.18 of its potential returns per unit of risk. The Celltrion is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  19,480,000  in Celltrion on September 27, 2024 and sell it today you would lose (40,000) from holding Celltrion or give up 0.21% of portfolio value over 90 days.

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

Dongil Metal Co  vs.  Celltrion

Dongil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongil Metal Co 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.

Celltrion

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dongil Metal and Celltrion

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

The idea behind Dongil Metal Co and Celltrion 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.