Correlation Between Design and Dongil Technology

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

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

Diversification Opportunities for Design and Dongil Technology

0.5

Correlation Coefficient

Design  Dongil Technology

Very weak diversification

The 3 months correlation between Design and Dongil is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Design Co and Dongil Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Technology and Design 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 Design Co are associated (or correlated) with Dongil Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Technology has no effect on the direction of Design i.e., Design and Dongil Technology go up and down completely randomly.

Pair Corralation between Design and Dongil Technology

Assuming the 90 days trading horizon Design Co is expected to under-perform the Dongil Technology. In addition to that, Design is 5.99 times more volatile than Dongil Technology. It trades about -0.15 of its total potential returns per unit of risk. Dongil Technology is currently generating about -0.07 per unit of volatility. If you would invest  1,101,682  in Dongil Technology on October 9, 2024 and sell it today you would lose (53,682) from holding Dongil Technology or give up 4.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

Design Co  vs.  Dongil Technology

Design

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dongil Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Design and Dongil Technology

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

The idea behind Design Co and Dongil Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.