Correlation Between Dongbu Insurance and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Hyundai Engineering 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 Hyundai Engineering 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 Hyundai Engineering Plastics, you can compare the effects of market volatilities on Dongbu Insurance and Hyundai Engineering 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 Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Hyundai Engineering.
Diversification Opportunities for Dongbu Insurance and Hyundai Engineering
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Hyundai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering 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 Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Hyundai Engineering
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.38 times more return on investment than Hyundai Engineering. However, Dongbu Insurance is 1.38 times more volatile than Hyundai Engineering Plastics. It trades about 0.06 of its potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about 0.0 per unit of risk. If you would invest 5,999,112 in Dongbu Insurance Co on September 14, 2024 and sell it today you would earn a total of 4,710,888 from holding Dongbu Insurance Co or generate 78.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| Dongbu Insurance |
| Hyundai Engineering |
Dongbu Insurance and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Hyundai Engineering
The main advantage of trading using opposite Dongbu Insurance and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. SK Hynix | Dongbu Insurance vs. POSCO Holdings |
| Hyundai Engineering vs. Dongbu Insurance Co | Hyundai Engineering vs. Vissem Electronics Co | Hyundai Engineering vs. Hana Financial | Hyundai Engineering vs. KakaoBank Corp |
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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