Correlation Between Moadata and Dongil Metal

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

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

Diversification Opportunities for Moadata and Dongil Metal

0.53

Correlation Coefficient

Moadata  Dongil Metal

Very weak diversification

The 3 months correlation between Moadata and Dongil is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and Moadata 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 Moadata Co are associated (or correlated) with Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Moadata i.e., Moadata and Dongil Metal go up and down completely randomly.

Pair Corralation between Moadata and Dongil Metal

Assuming the 90 days trading horizon Moadata Co is expected to under-perform the Dongil Metal. In addition to that, Moadata is 2.7 times more volatile than Dongil Metal Co. It trades about -0.13 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about -0.02 per unit of volatility. If you would invest  829,513  in Dongil Metal Co on October 6, 2024 and sell it today you would lose (14,513) from holding Dongil Metal Co or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Moadata Co  vs.  Dongil Metal Co

Moadata

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moadata 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 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 somewhat strong basic indicators, Dongil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moadata and Dongil Metal

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

The idea behind Moadata Co and Dongil Metal 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.