Correlation Between Dongbang Transport and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Kumho Petro 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 Kumho Petro 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 Kumho Petro Chemical, you can compare the effects of market volatilities on Dongbang Transport and Kumho Petro 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 Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Kumho Petro.
Diversification Opportunities for Dongbang Transport and Kumho Petro
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and Kumho is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical 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 Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Kumho Petro go up and down completely randomly.
Pair Corralation between Dongbang Transport and Kumho Petro
Assuming the 90 days trading horizon Dongbang Transport is expected to generate 3.51 times less return on investment than Kumho Petro. But when comparing it to its historical volatility, Dongbang Transport Logistics is 2.65 times less risky than Kumho Petro. It trades about 0.19 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,420,000 in Kumho Petro Chemical on October 24, 2024 and sell it today you would earn a total of 1,550,000 from holding Kumho Petro Chemical or generate 16.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Kumho Petro Chemical
Performance |
| Timeline |
| Dongbang Transport |
| Kumho Petro Chemical |
Dongbang Transport and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Kumho Petro
The main advantage of trading using opposite Dongbang Transport and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Dongbang Transport vs. Daiyang Metal Co | Dongbang Transport vs. Youngsin Metal Industrial | Dongbang Transport vs. Youngbo Chemical Co | Dongbang Transport vs. Daejung Chemicals Metals |
| Kumho Petro vs. DB Insurance Co | Kumho Petro vs. Sam Yang Foods | Kumho Petro vs. Dgb Financial | Kumho Petro vs. Koryo Credit Information |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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