Correlation Between Dongbu Insurance and Taeyang Metal
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Taeyang Metal 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 Taeyang Metal 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 Taeyang Metal Industrial, you can compare the effects of market volatilities on Dongbu Insurance and Taeyang Metal 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 Taeyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Taeyang Metal.
Diversification Opportunities for Dongbu Insurance and Taeyang Metal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dongbu and Taeyang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Taeyang Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taeyang Metal Industrial 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 Taeyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taeyang Metal Industrial has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Taeyang Metal go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Taeyang Metal
Assuming the 90 days trading horizon Dongbu Insurance is expected to generate 1.63 times less return on investment than Taeyang Metal. But when comparing it to its historical volatility, Dongbu Insurance Co is 2.54 times less risky than Taeyang Metal. It trades about 0.07 of its potential returns per unit of risk. Taeyang Metal Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 252,624 in Taeyang Metal Industrial on September 2, 2024 and sell it today you would earn a total of 163,876 from holding Taeyang Metal Industrial or generate 64.87% 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. Taeyang Metal Industrial
Performance |
| Timeline |
| Dongbu Insurance |
| Taeyang Metal Industrial |
Dongbu Insurance and Taeyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Taeyang Metal
The main advantage of trading using opposite Dongbu Insurance and Taeyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Taeyang Metal 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 Taeyang Metal will offset losses from the drop in Taeyang Metal's long position.| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance vs. Microfriend |
| Taeyang Metal vs. AptaBio Therapeutics | Taeyang Metal vs. Daewoo SBI SPAC | Taeyang Metal vs. Dream Security co | Taeyang Metal 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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