Correlation Between Dongbu Insurance and Heungkuk Metaltech
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Heungkuk Metaltech 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 Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Dongbu Insurance and Heungkuk Metaltech 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 Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Heungkuk Metaltech.
Diversification Opportunities for Dongbu Insurance and Heungkuk Metaltech
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbu and Heungkuk is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd 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 Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Heungkuk Metaltech go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Heungkuk Metaltech
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.87 times more return on investment than Heungkuk Metaltech. However, Dongbu Insurance is 1.87 times more volatile than Heungkuk Metaltech CoLtd. It trades about -0.02 of its potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about -0.05 per unit of risk. If you would invest 11,100,000 in Dongbu Insurance Co on August 31, 2024 and sell it today you would lose (180,000) from holding Dongbu Insurance Co or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Heungkuk Metaltech CoLtd
Performance |
| Timeline |
| Dongbu Insurance |
| Heungkuk Metaltech CoLtd |
Dongbu Insurance and Heungkuk Metaltech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Heungkuk Metaltech
The main advantage of trading using opposite Dongbu Insurance and Heungkuk Metaltech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Heungkuk Metaltech 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 Heungkuk Metaltech will offset losses from the drop in Heungkuk Metaltech'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 |
| Heungkuk Metaltech vs. Hyunwoo Industrial Co | Heungkuk Metaltech vs. Namhwa Industrial Co | Heungkuk Metaltech vs. Daiyang Metal Co | Heungkuk Metaltech vs. Handok Clean Tech |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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