Correlation Between Dongbu Insurance and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Digital Multimedia 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 Digital Multimedia 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 Digital Multimedia Technology, you can compare the effects of market volatilities on Dongbu Insurance and Digital Multimedia 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 Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Digital Multimedia.
Diversification Opportunities for Dongbu Insurance and Digital Multimedia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and Digital is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia 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 Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Digital Multimedia go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Digital Multimedia
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to under-perform the Digital Multimedia. But the stock apears to be less risky and, when comparing its historical volatility, Dongbu Insurance Co is 1.62 times less risky than Digital Multimedia. The stock trades about -0.12 of its potential returns per unit of risk. The Digital Multimedia Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 202,000 in Digital Multimedia Technology on November 7, 2024 and sell it today you would lose (3,600) from holding Digital Multimedia Technology or give up 1.78% 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. Digital Multimedia Technology
Performance |
| Timeline |
| Dongbu Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Digital Multimedia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Dongbu Insurance and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Digital Multimedia
The main advantage of trading using opposite Dongbu Insurance and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.| Dongbu Insurance vs. ISU Chemical Co | Dongbu Insurance vs. Seoul Electronics Telecom | Dongbu Insurance vs. Woori Technology | Dongbu Insurance vs. SH Energy Chemical |
| Digital Multimedia vs. Ssangyong Materials Corp | Digital Multimedia vs. Korea Information Communications | Digital Multimedia vs. Kaonmedia Co | Digital Multimedia vs. FNC Entertainment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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