Correlation Between Daekyung Machinery and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and Dongbang Ship 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 Daekyung Machinery and Dongbang Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daekyung Machinery Engineering and Dongbang Ship Machinery, you can compare the effects of market volatilities on Daekyung Machinery and Dongbang Ship 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 Daekyung Machinery with a short position of Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and Dongbang Ship.
Diversification Opportunities for Daekyung Machinery and Dongbang Ship
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daekyung and Dongbang is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship Machinery and Daekyung Machinery 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 Daekyung Machinery Engineering are associated (or correlated) with Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and Dongbang Ship go up and down completely randomly.
Pair Corralation between Daekyung Machinery and Dongbang Ship
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to generate 1.44 times more return on investment than Dongbang Ship. However, Daekyung Machinery is 1.44 times more volatile than Dongbang Ship Machinery. It trades about 0.05 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about 0.07 per unit of risk. If you would invest 41,200 in Daekyung Machinery Engineering on August 27, 2024 and sell it today you would earn a total of 11,300 from holding Daekyung Machinery Engineering or generate 27.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daekyung Machinery Engineering vs. Dongbang Ship Machinery
Performance |
| Timeline |
| Daekyung Machinery |
| Dongbang Ship Machinery |
Daekyung Machinery and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daekyung Machinery and Dongbang Ship
The main advantage of trading using opposite Daekyung Machinery and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, Dongbang Ship 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 Ship will offset losses from the drop in Dongbang Ship's long position.| Daekyung Machinery vs. AptaBio Therapeutics | Daekyung Machinery vs. Daewoo SBI SPAC | Daekyung Machinery vs. Dream Security co | Daekyung Machinery vs. Microfriend |
| Dongbang Ship vs. Samsung Electronics Co | Dongbang Ship vs. Samsung Electronics Co | Dongbang Ship vs. Hyundai Motor Co | Dongbang Ship vs. Hyundai Motor |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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