Correlation Between Dongwon System and Puloon Technology

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

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

Diversification Opportunities for Dongwon System and Puloon Technology

-0.2

Correlation Coefficient

Dongwon System  Puloon Technology

Good diversification

The 3 months correlation between Dongwon and Puloon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Dongwon System i.e., Dongwon System and Puloon Technology go up and down completely randomly.

Pair Corralation between Dongwon System and Puloon Technology

Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Puloon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Dongwon System is 1.18 times less risky than Puloon Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Puloon Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  662,088  in Puloon Technology on September 30, 2024 and sell it today you would earn a total of  9,912  from holding Puloon Technology or generate 1.5% return on investment over 90 days.

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

Dongwon System  vs.  Puloon Technology

Dongwon System

Risk-Adjusted Performance

0 of 100

Very Weak

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

Puloon Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Puloon 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 Dongwon System and Puloon Technology

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

The idea behind Dongwon System and Puloon 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.