Correlation Between Dongbang Transport and CHEMTRONICSCOLtd
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd, you can compare the effects of market volatilities on Dongbang Transport and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and CHEMTRONICSCOLtd.
Diversification Opportunities for Dongbang Transport and CHEMTRONICSCOLtd
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongbang and CHEMTRONICSCOLtd is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and CHEMTRONICSCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEMTRONICSCOLtd has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and CHEMTRONICSCOLtd go up and down completely randomly.
Pair Corralation between Dongbang Transport and CHEMTRONICSCOLtd
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.1 times more return on investment than CHEMTRONICSCOLtd. However, Dongbang Transport is 1.1 times more volatile than CHEMTRONICSCOLtd. It trades about -0.02 of its potential returns per unit of risk. CHEMTRONICSCOLtd is currently generating about -0.22 per unit of risk. If you would invest 225,000 in Dongbang Transport Logistics on September 12, 2024 and sell it today you would lose (6,500) from holding Dongbang Transport Logistics or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. CHEMTRONICSCOLtd
Performance |
| Timeline |
| Dongbang Transport |
| CHEMTRONICSCOLtd |
Dongbang Transport and CHEMTRONICSCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and CHEMTRONICSCOLtd
The main advantage of trading using opposite Dongbang Transport and CHEMTRONICSCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd will offset losses from the drop in CHEMTRONICSCOLtd's long position.| Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. SK Hynix | Dongbang Transport vs. POSCO Holdings |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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