Correlation Between Dongbu Insurance and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Bohae Brewery 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 Dongbu Insurance and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbu Insurance Co and Bohae Brewery, you can compare the effects of market volatilities on Dongbu Insurance and Bohae Brewery 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 Dongbu Insurance with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Bohae Brewery.
Diversification Opportunities for Dongbu Insurance and Bohae Brewery
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dongbu and Bohae is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Dongbu Insurance 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 Dongbu Insurance Co are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Bohae Brewery go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Bohae Brewery
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.12 times more return on investment than Bohae Brewery. However, Dongbu Insurance is 1.12 times more volatile than Bohae Brewery. It trades about 0.07 of its potential returns per unit of risk. Bohae Brewery is currently generating about -0.03 per unit of risk. If you would invest 6,130,485 in Dongbu Insurance Co on September 1, 2024 and sell it today you would earn a total of 4,789,515 from holding Dongbu Insurance Co or generate 78.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Bohae Brewery
Performance |
| Timeline |
| Dongbu Insurance |
| Bohae Brewery |
Dongbu Insurance and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Bohae Brewery
The main advantage of trading using opposite Dongbu Insurance and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Dongbu Insurance vs. Dongbang Transport Logistics | Dongbu Insurance vs. Dongwon Metal Co | Dongbu Insurance vs. Homecast CoLtd | Dongbu Insurance vs. Youngsin Metal Industrial |
| Bohae Brewery vs. Korea Real Estate | Bohae Brewery vs. Korea Ratings Co | Bohae Brewery vs. IQuest Co | Bohae Brewery vs. Wonbang Tech Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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