Correlation Between Dongbang Transport and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Sejong Telecom 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 Sejong Telecom 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 Sejong Telecom, you can compare the effects of market volatilities on Dongbang Transport and Sejong Telecom 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 Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Sejong Telecom.
Diversification Opportunities for Dongbang Transport and Sejong Telecom
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongbang and Sejong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom 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 Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Sejong Telecom go up and down completely randomly.
Pair Corralation between Dongbang Transport and Sejong Telecom
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 0.67 times more return on investment than Sejong Telecom. However, Dongbang Transport Logistics is 1.49 times less risky than Sejong Telecom. It trades about 0.17 of its potential returns per unit of risk. Sejong Telecom is currently generating about 0.05 per unit of risk. If you would invest 218,500 in Dongbang Transport Logistics on October 12, 2024 and sell it today you would earn a total of 9,500 from holding Dongbang Transport Logistics or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Sejong Telecom
Performance |
| Timeline |
| Dongbang Transport |
| Sejong Telecom |
Dongbang Transport and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Sejong Telecom
The main advantage of trading using opposite Dongbang Transport and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| Dongbang Transport vs. Hwangkum Steel Technology | Dongbang Transport vs. Asia Technology Co | Dongbang Transport vs. BIT Computer Co | Dongbang Transport vs. PJ Electronics Co |
| Sejong Telecom vs. Xavis Co | Sejong Telecom vs. Hurum Co | Sejong Telecom vs. Daishin Balance No8 | Sejong Telecom vs. Korea Real Estate |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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