Correlation Between Dongbu Insurance and Sajo Ind
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Sajo Ind 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 Sajo Ind 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 Sajo Ind, you can compare the effects of market volatilities on Dongbu Insurance and Sajo Ind 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 Sajo Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Sajo Ind.
Diversification Opportunities for Dongbu Insurance and Sajo Ind
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Sajo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Sajo Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sajo Ind 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 Sajo Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sajo Ind has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Sajo Ind go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Sajo Ind
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.23 times more return on investment than Sajo Ind. However, Dongbu Insurance is 1.23 times more volatile than Sajo Ind. It trades about 0.03 of its potential returns per unit of risk. Sajo Ind is currently generating about -0.21 per unit of risk. If you would invest 10,400,000 in Dongbu Insurance Co on September 13, 2024 and sell it today you would earn a total of 140,000 from holding Dongbu Insurance Co or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Sajo Ind
Performance |
| Timeline |
| Dongbu Insurance |
| Sajo Ind |
Dongbu Insurance and Sajo Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Sajo Ind
The main advantage of trading using opposite Dongbu Insurance and Sajo Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Sajo Ind 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 Sajo Ind will offset losses from the drop in Sajo Ind's long position.| Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. SK Hynix | Dongbu Insurance vs. POSCO Holdings |
| Sajo Ind vs. Samsung Electronics Co | Sajo Ind vs. Samsung Electronics Co | Sajo Ind vs. LG Energy Solution | Sajo Ind vs. SK Hynix |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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