Correlation Between Dongbang Transport and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Hana Materials 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 Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on Dongbang Transport and Hana Materials 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Hana Materials.
Diversification Opportunities for Dongbang Transport and Hana Materials
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongbang and Hana is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Hana Materials go up and down completely randomly.
Pair Corralation between Dongbang Transport and Hana Materials
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.13 times more return on investment than Hana Materials. However, Dongbang Transport is 1.13 times more volatile than Hana Materials. It trades about 0.0 of its potential returns per unit of risk. Hana Materials is currently generating about -0.01 per unit of risk. If you would invest 263,500 in Dongbang Transport Logistics on September 14, 2024 and sell it today you would lose (47,500) from holding Dongbang Transport Logistics or give up 18.03% 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. Hana Materials
Performance |
| Timeline |
| Dongbang Transport |
| Hana Materials |
Dongbang Transport and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Hana Materials
The main advantage of trading using opposite Dongbang Transport and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. SK Hynix | Dongbang Transport vs. POSCO Holdings |
| Hana Materials vs. Nable Communications | Hana Materials vs. Inzi Display CoLtd | Hana Materials vs. Dongbang Transport Logistics | Hana Materials vs. Nh Investment And |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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