Correlation Between DONGKUK TED and Microfriend

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

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

Diversification Opportunities for DONGKUK TED and Microfriend

0.67

Correlation Coefficient

DONGKUK TED  Microfriend

Poor diversification

The 3 months correlation between DONGKUK and Microfriend is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DONGKUK TED METAL and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend and DONGKUK TED 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 DONGKUK TED METAL are associated (or correlated) with Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of DONGKUK TED i.e., DONGKUK TED and Microfriend go up and down completely randomly.

Pair Corralation between DONGKUK TED and Microfriend

Assuming the 90 days trading horizon DONGKUK TED METAL is expected to generate 0.5 times more return on investment than Microfriend. However, DONGKUK TED METAL is 2.0 times less risky than Microfriend. It trades about 0.25 of its potential returns per unit of risk. Microfriend is currently generating about 0.0 per unit of risk. If you would invest  610,000  in DONGKUK TED METAL on October 22, 2024 and sell it today you would earn a total of  31,000  from holding DONGKUK TED METAL or generate 5.08% return on investment over 90 days.

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

DONGKUK TED METAL  vs.  Microfriend

DONGKUK TED METAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DONGKUK TED METAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DONGKUK TED is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microfriend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microfriend 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.

Pair Trading with DONGKUK TED and Microfriend

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

The idea behind DONGKUK TED METAL and Microfriend 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.