Correlation Between Dongbang Transport and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Dongbang Transport and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Sungchang Autotech.
Diversification Opportunities for Dongbang Transport and Sungchang Autotech
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbang and Sungchang is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Dongbang Transport and Sungchang Autotech
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.75 times more return on investment than Sungchang Autotech. However, Dongbang Transport is 1.75 times more volatile than Sungchang Autotech Co. It trades about 0.01 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.06 per unit of risk. If you would invest 259,000 in Dongbang Transport Logistics on October 16, 2024 and sell it today you would lose (31,500) from holding Dongbang Transport Logistics or give up 12.16% 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. Sungchang Autotech Co
Performance |
| Timeline |
| Dongbang Transport |
| Sungchang Autotech |
Dongbang Transport and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Sungchang Autotech
The main advantage of trading using opposite Dongbang Transport and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Dongbang Transport vs. Formetal Co | Dongbang Transport vs. Heungkuk Metaltech CoLtd | Dongbang Transport vs. Daejung Chemicals Metals | Dongbang Transport vs. Osang Healthcare Co,Ltd |
| Sungchang Autotech vs. Dongbang Transport Logistics | Sungchang Autotech vs. Lotte Non Life Insurance | Sungchang Autotech vs. Genie Music | Sungchang Autotech vs. Sangsin Energy Display |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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