Correlation Between Dongbu Insurance and Sempio Foods
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and Sempio Foods 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 Sempio Foods 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 Sempio Foods Co, you can compare the effects of market volatilities on Dongbu Insurance and Sempio Foods 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 Sempio Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and Sempio Foods.
Diversification Opportunities for Dongbu Insurance and Sempio Foods
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbu and Sempio is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and Sempio Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempio Foods 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 Sempio Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempio Foods has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and Sempio Foods go up and down completely randomly.
Pair Corralation between Dongbu Insurance and Sempio Foods
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.27 times more return on investment than Sempio Foods. However, Dongbu Insurance is 1.27 times more volatile than Sempio Foods Co. It trades about 0.01 of its potential returns per unit of risk. Sempio Foods Co is currently generating about -0.08 per unit of risk. If you would invest 10,630,000 in Dongbu Insurance Co on September 21, 2024 and sell it today you would lose (220,000) from holding Dongbu Insurance Co or give up 2.07% 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. Sempio Foods Co
Performance |
| Timeline |
| Dongbu Insurance |
| Sempio Foods |
Dongbu Insurance and Sempio Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Insurance and Sempio Foods
The main advantage of trading using opposite Dongbu Insurance and Sempio Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, Sempio Foods 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 Sempio Foods will offset losses from the drop in Sempio Foods' long position.| Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. Samsung Electronics Co | Dongbu Insurance vs. SK Hynix | Dongbu Insurance vs. POSCO Holdings |
| Sempio Foods vs. Camus Engineering Construction | Sempio Foods vs. Dongbu Insurance Co | Sempio Foods vs. KakaoBank Corp | Sempio Foods vs. Samsung Life Insurance |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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