Correlation Between Automobile and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Automobile 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 Automobile and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Dongbang Transport Logistics, you can compare the effects of market volatilities on Automobile 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 Automobile with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Dongbang Transport.
Diversification Opportunities for Automobile and Dongbang Transport
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automobile and Dongbang is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Automobile 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 Automobile Pc 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 Automobile i.e., Automobile and Dongbang Transport go up and down completely randomly.
Pair Corralation between Automobile and Dongbang Transport
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Dongbang Transport. But the stock apears to be less risky and, when comparing its historical volatility, Automobile Pc is 1.26 times less risky than Dongbang Transport. The stock trades about -0.08 of its potential returns per unit of risk. The Dongbang Transport Logistics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 299,000 in Dongbang Transport Logistics on September 1, 2024 and sell it today you would lose (71,500) from holding Dongbang Transport Logistics or give up 23.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Automobile Pc |
| Dongbang Transport |
Automobile and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Dongbang Transport
The main advantage of trading using opposite Automobile and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile 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.| Automobile vs. Miwon Chemical | Automobile vs. Sung Bo Chemicals | Automobile vs. Chin Yang Chemical | Automobile vs. Daehan Synthetic Fiber |
| Dongbang Transport vs. Infinitt Healthcare Co | Dongbang Transport vs. LG Household Healthcare | Dongbang Transport vs. Cube Entertainment | Dongbang Transport vs. Digital Multimedia Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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