Correlation Between Dongbu Insurance and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Kyeryong Construction 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 Kyeryong Construction 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 Kyeryong Construction Industrial, you can compare the effects of market volatilities on Dongbu Insurance and Kyeryong Construction 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 Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Kyeryong Construction.
Diversification Opportunities for Dongbu Insurance and Kyeryong Construction
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Kyeryong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction 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 Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Kyeryong Construction
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to under-perform the Kyeryong Construction. In addition to that, Dongbu Insurance is 2.42 times more volatile than Kyeryong Construction Industrial. It trades about -0.31 of its total potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about -0.32 per unit of volatility. If you would invest 1,324,000 in Kyeryong Construction Industrial on October 25, 2024 and sell it today you would lose (74,000) from holding Kyeryong Construction Industrial or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Kyeryong Construction Industri
Performance |
| Timeline |
| Dongbu Insurance |
| Kyeryong Construction |
Dongbu Insurance and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Kyeryong Construction
The main advantage of trading using opposite Dongbu Insurance and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Kyeryong Construction 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| Dongbu Insurance vs. Korea Steel Co | Dongbu Insurance vs. Eugene Technology CoLtd | Dongbu Insurance vs. Seers Technology | Dongbu Insurance vs. Genie Music |
| Kyeryong Construction vs. KB Financial Group | Kyeryong Construction vs. Shinhan Financial Group | Kyeryong Construction vs. Hana Financial | Kyeryong Construction vs. Woori Financial Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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