Correlation Between Dongbang Transport and HMM
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and HMM 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 HMM 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 HMM Co, you can compare the effects of market volatilities on Dongbang Transport and HMM 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 HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and HMM.
Diversification Opportunities for Dongbang Transport and HMM
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongbang and HMM is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co 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 HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and HMM go up and down completely randomly.
Pair Corralation between Dongbang Transport and HMM
Assuming the 90 days trading horizon Dongbang Transport is expected to generate 1.23 times less return on investment than HMM. But when comparing it to its historical volatility, Dongbang Transport Logistics is 2.45 times less risky than HMM. It trades about 0.17 of its potential returns per unit of risk. HMM Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,802,000 in HMM Co on October 26, 2024 and sell it today you would earn a total of 79,000 from holding HMM Co or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. HMM Co
Performance |
| Timeline |
| Dongbang Transport |
| HMM Co |
Dongbang Transport and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and HMM
The main advantage of trading using opposite Dongbang Transport and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Dongbang Transport vs. KB Financial Group | Dongbang Transport vs. Shinhan Financial Group | Dongbang Transport vs. Hana Financial | Dongbang Transport vs. Woori Financial Group |
| HMM vs. Dongbang Transport Logistics | HMM vs. BGF Retail Co | HMM vs. Shinhan Inverse Copper | HMM vs. Youngsin Metal Industrial |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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