Correlation Between Keyang Electric and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and Dongbang Transport 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 Keyang Electric and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and Dongbang Transport Logistics, you can compare the effects of market volatilities on Keyang Electric and Dongbang Transport 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 Keyang Electric with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Dongbang Transport.
Diversification Opportunities for Keyang Electric and Dongbang Transport
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keyang and Dongbang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Keyang Electric i.e., Keyang Electric and Dongbang Transport go up and down completely randomly.
Pair Corralation between Keyang Electric and Dongbang Transport
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 2.17 times more return on investment than Dongbang Transport. However, Keyang Electric is 2.17 times more volatile than Dongbang Transport Logistics. It trades about 0.34 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about 0.14 per unit of risk. If you would invest 350,000 in Keyang Electric Machinery on October 15, 2024 and sell it today you would earn a total of 59,000 from holding Keyang Electric Machinery or generate 16.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Keyang Electric Machinery |
| Dongbang Transport |
Keyang Electric and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and Dongbang Transport
The main advantage of trading using opposite Keyang Electric and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.| Keyang Electric vs. Samyung Trading Co | Keyang Electric vs. Coloray International Investment | Keyang Electric vs. Korea Investment Holdings | Keyang Electric vs. E Investment Development |
| Dongbang Transport vs. Keyang Electric Machinery | Dongbang Transport vs. Miwon Chemicals Co | Dongbang Transport vs. Daeduck Electronics Co | Dongbang Transport vs. Woorim Machinery 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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