Correlation Between Dongbu Insurance and DAEYANG ELECTRICCoLtd
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd, you can compare the effects of market volatilities on Dongbu Insurance and DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and DAEYANG ELECTRICCoLtd.
Diversification Opportunities for Dongbu Insurance and DAEYANG ELECTRICCoLtd
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and DAEYANG is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and DAEYANG ELECTRICCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEYANG ELECTRICCoLtd has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and DAEYANG ELECTRICCoLtd go up and down completely randomly.
Pair Corralation between Dongbu Insurance and DAEYANG ELECTRICCoLtd
Assuming the 90 days trading horizon Dongbu Insurance is expected to generate 22.39 times less return on investment than DAEYANG ELECTRICCoLtd. But when comparing it to its historical volatility, Dongbu Insurance Co is 1.14 times less risky than DAEYANG ELECTRICCoLtd. It trades about 0.01 of its potential returns per unit of risk. DAEYANG ELECTRICCoLtd is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,144,000 in DAEYANG ELECTRICCoLtd on September 1, 2024 and sell it today you would earn a total of 142,000 from holding DAEYANG ELECTRICCoLtd or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongbu Insurance Co vs. DAEYANG ELECTRICCoLtd
Performance |
| Timeline |
| Dongbu Insurance |
| DAEYANG ELECTRICCoLtd |
Dongbu Insurance and DAEYANG ELECTRICCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and DAEYANG ELECTRICCoLtd
The main advantage of trading using opposite Dongbu Insurance and DAEYANG ELECTRICCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd will offset losses from the drop in DAEYANG ELECTRICCoLtd's long position.| Dongbu Insurance vs. Dongbang Transport Logistics | Dongbu Insurance vs. Dongwon Metal Co | Dongbu Insurance vs. Homecast CoLtd | Dongbu Insurance vs. Youngsin Metal Industrial |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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