Correlation Between Dongil Metal and CKH Food

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

Diversification Opportunities for Dongil Metal and CKH Food

0.23

Correlation Coefficient

Dongil Metal  CKH Food

Modest diversification

The 3 months correlation between Dongil and CKH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and CKH Food Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKH Food Health 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 CKH Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKH Food Health has no effect on the direction of Dongil Metal i.e., Dongil Metal and CKH Food go up and down completely randomly.

Pair Corralation between Dongil Metal and CKH Food

Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 0.88 times more return on investment than CKH Food. However, Dongil Metal Co is 1.13 times less risky than CKH Food. It trades about 0.39 of its potential returns per unit of risk. CKH Food Health is currently generating about -0.08 per unit of risk. If you would invest  768,701  in Dongil Metal Co on October 25, 2024 and sell it today you would earn a total of  136,299  from holding Dongil Metal Co or generate 17.73% return on investment over 90 days.

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

Dongil Metal Co  vs.  CKH Food Health

Dongil Metal

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dongil Metal Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongil Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CKH Food Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CKH Food Health 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dongil Metal and CKH Food

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

The idea behind Dongil Metal Co and CKH Food Health 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.