Correlation Between Dongbu Insurance and Wave Electronics
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Wave Electronics 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 Wave Electronics 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 Wave Electronics Co, you can compare the effects of market volatilities on Dongbu Insurance and Wave Electronics 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 Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Wave Electronics.
Diversification Opportunities for Dongbu Insurance and Wave Electronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Wave is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics 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 Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Wave Electronics go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Wave Electronics
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to under-perform the Wave Electronics. In addition to that, Dongbu Insurance is 1.56 times more volatile than Wave Electronics Co. It trades about -0.08 of its total potential returns per unit of risk. Wave Electronics Co is currently generating about 0.21 per unit of volatility. If you would invest 369,500 in Wave Electronics Co on October 12, 2024 and sell it today you would earn a total of 20,000 from holding Wave Electronics Co or generate 5.41% 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. Wave Electronics Co
Performance |
| Timeline |
| Dongbu Insurance |
| Wave Electronics |
Dongbu Insurance and Wave Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Wave Electronics
The main advantage of trading using opposite Dongbu Insurance and Wave Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Wave Electronics 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 Wave Electronics will offset losses from the drop in Wave Electronics' long position.| Dongbu Insurance vs. Jeju Bank | Dongbu Insurance vs. Pureun Mutual Savings | Dongbu Insurance vs. Jb Financial | Dongbu Insurance vs. KB Financial Group |
| Wave Electronics vs. Kukdong Oil Chemicals | Wave Electronics vs. DB Insurance Co | Wave Electronics vs. Dongbu Insurance Co | Wave Electronics vs. Samsung Publishing 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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