Correlation Between Osteonic and DHP Korea

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

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

Diversification Opportunities for Osteonic and DHP Korea

0.58

Correlation Coefficient

Osteonic  DHP Korea

Very weak diversification

The 3 months correlation between Osteonic and DHP is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Osteonic Co and DHP Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHP Korea and Osteonic 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 Osteonic Co are associated (or correlated) with DHP Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHP Korea has no effect on the direction of Osteonic i.e., Osteonic and DHP Korea go up and down completely randomly.

Pair Corralation between Osteonic and DHP Korea

Assuming the 90 days trading horizon Osteonic Co is expected to generate 1.31 times more return on investment than DHP Korea. However, Osteonic is 1.31 times more volatile than DHP Korea Co. It trades about -0.02 of its potential returns per unit of risk. DHP Korea Co is currently generating about -0.14 per unit of risk. If you would invest  526,000  in Osteonic Co on September 3, 2024 and sell it today you would lose (38,000) from holding Osteonic Co or give up 7.22% of portfolio value over 90 days.

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

Osteonic Co  vs.  DHP Korea Co

Osteonic

Risk-Adjusted Performance

0 of 100

Very Weak

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

DHP Korea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHP Korea Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Osteonic and DHP Korea

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

The idea behind Osteonic Co and DHP Korea 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.