Correlation Between Dongwon System and Jeong Moon

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

By analyzing existing cross correlation between Dongwon System and Jeong Moon Information, you can compare the effects of market volatilities on Dongwon System and Jeong Moon 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 Dongwon System with a short position of Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and Jeong Moon.

Diversification Opportunities for Dongwon System and Jeong Moon

0.62

Correlation Coefficient

Dongwon System  Jeong Moon

Poor diversification

The 3 months correlation between Dongwon and Jeong is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information and Dongwon System 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 Dongwon System are associated (or correlated) with Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of Dongwon System i.e., Dongwon System and Jeong Moon go up and down completely randomly.

Pair Corralation between Dongwon System and Jeong Moon

Assuming the 90 days trading horizon Dongwon System is expected to generate 1.59 times more return on investment than Jeong Moon. However, Dongwon System is 1.59 times more volatile than Jeong Moon Information. It trades about 0.04 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.08 per unit of risk. If you would invest  4,125,000  in Dongwon System on September 14, 2024 and sell it today you would earn a total of  185,000  from holding Dongwon System or generate 4.48% return on investment over 90 days.

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

Dongwon System  vs.  Jeong Moon Information

Dongwon System

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongwon System are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongwon System may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jeong Moon Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeong Moon Information 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 Dongwon System and Jeong Moon

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

The idea behind Dongwon System and Jeong Moon Information 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.