Correlation Between Armada Hflr and Dong Il

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

By analyzing existing cross correlation between Armada Hflr Pr and Dong Il Corp, you can compare the effects of market volatilities on Armada Hflr and Dong Il 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 Armada Hflr with a short position of Dong Il. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Dong Il.

Diversification Opportunities for Armada Hflr and Dong Il

-0.54

Correlation Coefficient

Armada Hflr  Dong Il

Excellent diversification

The 3 months correlation between Armada and Dong is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Dong Il Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Il Corp and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Dong Il. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Il Corp has no effect on the direction of Armada Hflr i.e., Armada Hflr and Dong Il go up and down completely randomly.

Pair Corralation between Armada Hflr and Dong Il

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Dong Il. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.75 times less risky than Dong Il. The stock trades about -0.27 of its potential returns per unit of risk. The Dong Il Corp is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  4,640,000  in Dong Il Corp on September 27, 2024 and sell it today you would earn a total of  460,000  from holding Dong Il Corp or generate 9.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Armada Hflr Pr  vs.  Dong Il Corp

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Dong Il Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dong Il Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dong Il sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Dong Il

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

The idea behind Armada Hflr Pr and Dong Il Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.