Correlation Between Dongbang Transport and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Dongbu Insurance 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 Dongbang Transport and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Transport Logistics and Dongbu Insurance Co, you can compare the effects of market volatilities on Dongbang Transport and Dongbu Insurance 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 Dongbang Transport with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Dongbu Insurance.
Diversification Opportunities for Dongbang Transport and Dongbu Insurance
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbang and Dongbu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Dongbang Transport 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 Dongbang Transport Logistics are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Dongbang Transport and Dongbu Insurance
Assuming the 90 days trading horizon Dongbang Transport is expected to generate 5.39 times less return on investment than Dongbu Insurance. In addition to that, Dongbang Transport is 1.43 times more volatile than Dongbu Insurance Co. It trades about 0.01 of its total potential returns per unit of risk. Dongbu Insurance Co is currently generating about 0.07 per unit of volatility. If you would invest 5,389,482 in Dongbu Insurance Co on August 29, 2024 and sell it today you would earn a total of 4,940,518 from holding Dongbu Insurance Co or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Dongbu Insurance Co
Performance |
| Timeline |
| Dongbang Transport |
| Dongbu Insurance |
Dongbang Transport and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Dongbu Insurance
The main advantage of trading using opposite Dongbang Transport and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Dongbu Insurance 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport vs. Microfriend |
| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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