Correlation Between Dongbu Insurance and HLB Power
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and HLB Power 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 HLB Power 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 HLB Power Co, you can compare the effects of market volatilities on Dongbu Insurance and HLB Power 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 HLB Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and HLB Power.
Diversification Opportunities for Dongbu Insurance and HLB Power
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongbu and HLB is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power 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 HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and HLB Power go up and down completely randomly.
Pair Corralation between Dongbu Insurance and HLB Power
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 0.23 times more return on investment than HLB Power. However, Dongbu Insurance Co is 4.28 times less risky than HLB Power. It trades about -0.22 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.42 per unit of risk. If you would invest 9,880,000 in Dongbu Insurance Co on December 4, 2024 and sell it today you would lose (740,000) from holding Dongbu Insurance Co or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. HLB Power Co
Performance |
| Timeline |
| Dongbu Insurance |
| HLB Power |
Dongbu Insurance and HLB Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and HLB Power
The main advantage of trading using opposite Dongbu Insurance and HLB Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, HLB Power 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 HLB Power will offset losses from the drop in HLB Power's long position.| Dongbu Insurance vs. Seoam Machinery Industry | Dongbu Insurance vs. CU Medical Systems | Dongbu Insurance vs. KCC Engineering Construction | Dongbu Insurance vs. Daewoo Engineering Construction |
| HLB Power vs. Lotte Rental Co | HLB Power vs. TK Chemical | HLB Power vs. Nable Communications | HLB Power vs. Jeju Beer Co |
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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