Correlation Between Dongbu Insurance and Ray
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Ray 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 Ray 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 Ray Co, you can compare the effects of market volatilities on Dongbu Insurance and Ray 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 Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Ray.
Diversification Opportunities for Dongbu Insurance and Ray
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Ray is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Ray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ray Co 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 Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ray Co has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Ray go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Ray
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 0.74 times more return on investment than Ray. However, Dongbu Insurance Co is 1.35 times less risky than Ray. It trades about -0.05 of its potential returns per unit of risk. Ray Co is currently generating about -0.47 per unit of risk. If you would invest 11,250,000 in Dongbu Insurance Co on September 3, 2024 and sell it today you would lose (330,000) from holding Dongbu Insurance Co or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Insurance Co vs. Ray Co
Performance |
| Timeline |
| Dongbu Insurance |
| Ray Co |
Dongbu Insurance and Ray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Ray
The main advantage of trading using opposite Dongbu Insurance and Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Ray 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 Ray will offset losses from the drop in Ray's long position.| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance vs. Microfriend |
| Ray vs. Wonil Special Steel | Ray vs. Korea Petro Chemical | Ray vs. JC Chemical Co | Ray vs. Namhae Chemical |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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