Correlation Between Dongbang Transport and Automobile
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Dongbang Transport and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Automobile.
Diversification Opportunities for Dongbang Transport and Automobile
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and Automobile is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Automobile go up and down completely randomly.
Pair Corralation between Dongbang Transport and Automobile
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 0.52 times more return on investment than Automobile. However, Dongbang Transport Logistics is 1.94 times less risky than Automobile. It trades about 0.19 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.21 per unit of risk. If you would invest 218,000 in Dongbang Transport Logistics on October 24, 2024 and sell it today you would earn a total of 10,000 from holding Dongbang Transport Logistics or generate 4.59% 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. Automobile Pc
Performance |
| Timeline |
| Dongbang Transport |
| Automobile Pc |
Dongbang Transport and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Automobile
The main advantage of trading using opposite Dongbang Transport and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile'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 |
| Automobile vs. Ssangyong Information Communication | Automobile vs. Leaders Technology Investment | Automobile vs. TS Investment Corp | Automobile vs. KTB Investment Securities |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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