Correlation Between Seoul Food and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Dongbu Insurance 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 Seoul Food and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Dongbu Insurance Co, you can compare the effects of market volatilities on Seoul Food and Dongbu Insurance 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 Seoul Food with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Dongbu Insurance.
Diversification Opportunities for Seoul Food and Dongbu Insurance
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seoul and Dongbu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Seoul Food i.e., Seoul Food and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Seoul Food and Dongbu Insurance
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Dongbu Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.75 times less risky than Dongbu Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The Dongbu Insurance Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,530,845 in Dongbu Insurance Co on September 2, 2024 and sell it today you would earn a total of 5,389,155 from holding Dongbu Insurance Co or generate 97.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Dongbu Insurance Co
Performance |
| Timeline |
| Seoul Food Industrial |
| Dongbu Insurance |
Seoul Food and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Dongbu Insurance
The main advantage of trading using opposite Seoul Food and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Dongbu Insurance 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| Seoul Food vs. AptaBio Therapeutics | Seoul Food vs. Daewoo SBI SPAC | Seoul Food vs. Dream Security co | Seoul Food vs. Microfriend |
| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance vs. Microfriend |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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