Correlation Between Dongil Metal and ITM Semiconductor

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

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

Diversification Opportunities for Dongil Metal and ITM Semiconductor

0.95

Correlation Coefficient

Dongil Metal  ITM Semiconductor

Almost no diversification

The 3 months correlation between Dongil and ITM is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor and Dongil Metal 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 Dongil Metal Co are associated (or correlated) with ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of Dongil Metal i.e., Dongil Metal and ITM Semiconductor go up and down completely randomly.

Pair Corralation between Dongil Metal and ITM Semiconductor

Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 0.44 times more return on investment than ITM Semiconductor. However, Dongil Metal Co is 2.29 times less risky than ITM Semiconductor. It trades about -0.22 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.33 per unit of risk. If you would invest  908,000  in Dongil Metal Co on September 23, 2024 and sell it today you would lose (120,000) from holding Dongil Metal Co or give up 13.22% of portfolio value over 90 days.

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

Dongil Metal Co  vs.  ITM Semiconductor Co

Dongil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dongil Metal and ITM Semiconductor

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

The idea behind Dongil Metal Co and ITM Semiconductor Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .