Correlation Between Dongbang Transport and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Namhae Chemical 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 Namhae Chemical 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 Namhae Chemical, you can compare the effects of market volatilities on Dongbang Transport and Namhae Chemical 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Namhae Chemical.
Diversification Opportunities for Dongbang Transport and Namhae Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbang and Namhae is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Namhae Chemical go up and down completely randomly.
Pair Corralation between Dongbang Transport and Namhae Chemical
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the Namhae Chemical. In addition to that, Dongbang Transport is 2.25 times more volatile than Namhae Chemical. It trades about -0.11 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.15 per unit of volatility. If you would invest 649,000 in Namhae Chemical on September 5, 2024 and sell it today you would lose (21,000) from holding Namhae Chemical or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Namhae Chemical
Performance |
| Timeline |
| Dongbang Transport |
| Namhae Chemical |
Dongbang Transport and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Namhae Chemical
The main advantage of trading using opposite Dongbang Transport and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport vs. Microfriend |
| Namhae Chemical vs. Taeyang Metal Industrial | Namhae Chemical vs. Dongbang Transport Logistics | Namhae Chemical vs. Formetal Co | Namhae Chemical vs. Digital Multimedia Technology |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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