Correlation Between NewFlex Technology and Dongil Technology

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

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

Diversification Opportunities for NewFlex Technology and Dongil Technology

0.37

Correlation Coefficient

NewFlex Technology  Dongil Technology

Weak diversification

The 3 months correlation between NewFlex and Dongil is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Dongil Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Technology and NewFlex Technology 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 NewFlex Technology Co are associated (or correlated) with Dongil Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Technology has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and Dongil Technology go up and down completely randomly.

Pair Corralation between NewFlex Technology and Dongil Technology

Assuming the 90 days trading horizon NewFlex Technology Co is expected to generate 4.21 times more return on investment than Dongil Technology. However, NewFlex Technology is 4.21 times more volatile than Dongil Technology. It trades about 0.0 of its potential returns per unit of risk. Dongil Technology is currently generating about -0.13 per unit of risk. If you would invest  492,000  in NewFlex Technology Co on September 3, 2024 and sell it today you would lose (25,000) from holding NewFlex Technology Co or give up 5.08% of portfolio value over 90 days.

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

NewFlex Technology Co  vs.  Dongil Technology

NewFlex Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dongil Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongil Technology 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 NewFlex Technology and Dongil Technology

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

The idea behind NewFlex Technology Co and Dongil 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.