Correlation Between Korean Reinsurance and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Dongbang Transport 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 Korean Reinsurance and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Dongbang Transport Logistics, you can compare the effects of market volatilities on Korean Reinsurance and Dongbang Transport 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 Korean Reinsurance with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Dongbang Transport.
Diversification Opportunities for Korean Reinsurance and Dongbang Transport
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korean and Dongbang is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Dongbang Transport go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Dongbang Transport
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.47 times more return on investment than Dongbang Transport. However, Korean Reinsurance Co is 2.14 times less risky than Dongbang Transport. It trades about 0.09 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about 0.01 per unit of risk. If you would invest 436,519 in Korean Reinsurance Co on August 29, 2024 and sell it today you would earn a total of 353,481 from holding Korean Reinsurance Co or generate 80.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Korean Reinsurance |
| Dongbang Transport |
Korean Reinsurance and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Dongbang Transport
The main advantage of trading using opposite Korean Reinsurance and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport vs. Microfriend |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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