Correlation Between Dongbang Transport and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Dongbang Transport and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Seoam Machinery.
Diversification Opportunities for Dongbang Transport and Seoam Machinery
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and Seoam is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Seoam Machinery go up and down completely randomly.
Pair Corralation between Dongbang Transport and Seoam Machinery
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.52 times more return on investment than Seoam Machinery. However, Dongbang Transport is 1.52 times more volatile than Seoam Machinery Industry. It trades about 0.01 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.04 per unit of risk. If you would invest 230,000 in Dongbang Transport Logistics on September 4, 2024 and sell it today you would lose (12,000) from holding Dongbang Transport Logistics or give up 5.22% 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. Seoam Machinery Industry
Performance |
| Timeline |
| Dongbang Transport |
| Seoam Machinery Industry |
Dongbang Transport and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Seoam Machinery
The main advantage of trading using opposite Dongbang Transport and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport vs. Microfriend |
| Seoam Machinery vs. Daiyang Metal Co | Seoam Machinery vs. Formetal Co | Seoam Machinery vs. Sangsangin Investment Securities | Seoam Machinery vs. Kyeryong Construction Industrial |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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