Correlation Between Dongbu Insurance and Korea New
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Korea New 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 Korea New 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 Korea New Network, you can compare the effects of market volatilities on Dongbu Insurance and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Korea New.
Diversification Opportunities for Dongbu Insurance and Korea New
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and Korea is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Korea New go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Korea New
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 0.95 times more return on investment than Korea New. However, Dongbu Insurance Co is 1.06 times less risky than Korea New. It trades about -0.08 of its potential returns per unit of risk. Korea New Network is currently generating about -0.25 per unit of risk. If you would invest 10,540,000 in Dongbu Insurance Co on October 12, 2024 and sell it today you would lose (370,000) from holding Dongbu Insurance Co or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Korea New Network
Performance |
| Timeline |
| Dongbu Insurance |
| Korea New Network |
Dongbu Insurance and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Korea New
The main advantage of trading using opposite Dongbu Insurance and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New's long position.| Dongbu Insurance vs. Lotte Chilsung Beverage | Dongbu Insurance vs. Wireless Power Amplifier | Dongbu Insurance vs. Duksan Hi Metal | Dongbu Insurance vs. Hanjin Transportation Co |
| Korea New vs. Wireless Power Amplifier | Korea New vs. Ssangyong Information Communication | Korea New vs. Dongbu Insurance Co | Korea New vs. Digital Power Communications |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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