Correlation Between Dongwon System and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Dongwon System and DB Insurance 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 Dongwon System and DB Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and DB Insurance Co, you can compare the effects of market volatilities on Dongwon System and DB Insurance 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 Dongwon System with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and DB Insurance.
Diversification Opportunities for Dongwon System and DB Insurance
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongwon and 005830 is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and Dongwon System 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 Dongwon System are associated (or correlated) with DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of Dongwon System i.e., Dongwon System and DB Insurance go up and down completely randomly.
Pair Corralation between Dongwon System and DB Insurance
Assuming the 90 days trading horizon Dongwon System is expected to under-perform the DB Insurance. In addition to that, Dongwon System is 1.12 times more volatile than DB Insurance Co. It trades about -0.14 of its total potential returns per unit of risk. DB Insurance Co is currently generating about -0.12 per unit of volatility. If you would invest 11,060,000 in DB Insurance Co on August 29, 2024 and sell it today you would lose (730,000) from holding DB Insurance Co or give up 6.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. DB Insurance Co
Performance |
| Timeline |
| Dongwon System |
| DB Insurance |
Dongwon System and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and DB Insurance
The main advantage of trading using opposite Dongwon System and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System position performs unexpectedly, DB Insurance 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 DB Insurance will offset losses from the drop in DB Insurance's long position.| Dongwon System vs. LG Chemicals | Dongwon System vs. POSCO Holdings | Dongwon System vs. Hanwha Solutions | Dongwon System vs. Lotte Chemical Corp |
| DB Insurance vs. Cube Entertainment | DB Insurance vs. Dreamus Company | DB Insurance vs. LG Energy Solution | DB Insurance vs. Dongwon System |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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