Correlation Between Dongbu Insurance and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Dongbu Insurance and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Hanjoo Light.
Diversification Opportunities for Dongbu Insurance and Hanjoo Light
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Hanjoo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Hanjoo Light go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Hanjoo Light
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to under-perform the Hanjoo Light. In addition to that, Dongbu Insurance is 1.25 times more volatile than Hanjoo Light Metal. It trades about -0.25 of its total potential returns per unit of risk. Hanjoo Light Metal is currently generating about 0.09 per unit of volatility. If you would invest 74,900 in Hanjoo Light Metal on October 24, 2024 and sell it today you would earn a total of 2,200 from holding Hanjoo Light Metal or generate 2.94% 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. Hanjoo Light Metal
Performance |
Timeline |
Dongbu Insurance |
Hanjoo Light Metal |
Dongbu Insurance and Hanjoo Light Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dongbu Insurance and Hanjoo Light
The main advantage of trading using opposite Dongbu Insurance and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.Dongbu Insurance vs. Hanjoo Light Metal | Dongbu Insurance vs. Heungkuk Metaltech CoLtd | Dongbu Insurance vs. Duksan Hi Metal | Dongbu Insurance vs. MetaLabs Co |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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