Correlation Between Dongbu Insurance and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Hana Financial 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 Hana Financial 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 Hana Financial, you can compare the effects of market volatilities on Dongbu Insurance and Hana Financial 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 Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Hana Financial.
Diversification Opportunities for Dongbu Insurance and Hana Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbu and Hana is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 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 Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Hana Financial go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Hana Financial
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.23 times more return on investment than Hana Financial. However, Dongbu Insurance is 1.23 times more volatile than Hana Financial. It trades about -0.03 of its potential returns per unit of risk. Hana Financial is currently generating about -0.12 per unit of risk. If you would invest 11,060,000 in Dongbu Insurance Co on August 27, 2024 and sell it today you would lose (210,000) from holding Dongbu Insurance Co or give up 1.9% 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. Hana Financial
Performance |
| Timeline |
| Dongbu Insurance |
| Hana Financial |
Dongbu Insurance and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Hana Financial
The main advantage of trading using opposite Dongbu Insurance and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's long position.| Dongbu Insurance vs. Seoul Semiconductor Co | Dongbu Insurance vs. Samick Musical Instruments | Dongbu Insurance vs. Nice Information Telecommunication | Dongbu Insurance vs. Innowireless Co |
| Hana Financial vs. Daejung Chemicals Metals | Hana Financial vs. Mobileleader CoLtd | Hana Financial vs. Nice Information Telecommunication | Hana Financial vs. Hanjoo Light Metal |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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