Correlation Between Dongbu Insurance and Hyundai
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Dongbu Insurance and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Hyundai.
Diversification Opportunities for Dongbu Insurance and Hyundai
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Hyundai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Hyundai go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Hyundai
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.2 times more return on investment than Hyundai. However, Dongbu Insurance is 1.2 times more volatile than Hyundai Motor. It trades about 0.07 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.05 per unit of risk. If you would invest 5,601,527 in Dongbu Insurance Co on September 4, 2024 and sell it today you would earn a total of 5,328,473 from holding Dongbu Insurance Co or generate 95.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Hyundai Motor
Performance |
| Timeline |
| Dongbu Insurance |
| Hyundai Motor |
Dongbu Insurance and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Hyundai
The main advantage of trading using opposite Dongbu Insurance and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance vs. Microfriend |
| Hyundai vs. Eagon Industrial Co | Hyundai vs. Digital Power Communications | Hyundai vs. Songwon Industrial Co | Hyundai vs. Ssangyong Information Communication |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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