Correlation Between Dongbang Transport and Dreamus
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Dreamus 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 Dreamus 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 Dreamus Company, you can compare the effects of market volatilities on Dongbang Transport and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Dreamus.
Diversification Opportunities for Dongbang Transport and Dreamus
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and Dreamus is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Dreamus go up and down completely randomly.
Pair Corralation between Dongbang Transport and Dreamus
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 0.93 times more return on investment than Dreamus. However, Dongbang Transport Logistics is 1.07 times less risky than Dreamus. It trades about 0.01 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.02 per unit of risk. If you would invest 259,000 in Dongbang Transport Logistics on October 14, 2024 and sell it today you would lose (29,500) from holding Dongbang Transport Logistics or give up 11.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Dreamus Company
Performance |
| Timeline |
| Dongbang Transport |
| Dreamus Company |
Dongbang Transport and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Dreamus
The main advantage of trading using opposite Dongbang Transport and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| Dongbang Transport vs. Lotte Non Life Insurance | Dongbang Transport vs. Samsung Life Insurance | Dongbang Transport vs. Woorim Machinery Co | Dongbang Transport vs. Polaris Office Corp |
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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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