Correlation Between TR Biofab and Dongwon Metal

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

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

Diversification Opportunities for TR Biofab and Dongwon Metal

0.33

Correlation Coefficient

TR Biofab  Dongwon Metal

Weak diversification

The 3 months correlation between 246710 and Dongwon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding TR Biofab Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and TR Biofab 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 TR Biofab Co are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of TR Biofab i.e., TR Biofab and Dongwon Metal go up and down completely randomly.

Pair Corralation between TR Biofab and Dongwon Metal

Assuming the 90 days trading horizon TR Biofab Co is expected to under-perform the Dongwon Metal. But the stock apears to be less risky and, when comparing its historical volatility, TR Biofab Co is 1.86 times less risky than Dongwon Metal. The stock trades about -0.05 of its potential returns per unit of risk. The Dongwon Metal Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  142,500  in Dongwon Metal Co on September 14, 2024 and sell it today you would earn a total of  30,500  from holding Dongwon Metal Co or generate 21.4% return on investment over 90 days.

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

TR Biofab Co  vs.  Dongwon Metal Co

TR Biofab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TR Biofab Co 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.

Dongwon Metal

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dongwon Metal Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongwon Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TR Biofab and Dongwon Metal

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

The idea behind TR Biofab Co and Dongwon Metal 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..