Correlation Between Leaders Technology and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Leaders Technology and Dongbu 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 Leaders Technology and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and Dongbu Insurance Co, you can compare the effects of market volatilities on Leaders Technology and Dongbu 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 Leaders Technology with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and Dongbu Insurance.
Diversification Opportunities for Leaders Technology and Dongbu Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leaders and Dongbu is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Leaders Technology 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 Leaders Technology Investment are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Leaders Technology i.e., Leaders Technology and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Leaders Technology and Dongbu Insurance
Assuming the 90 days trading horizon Leaders Technology Investment is expected to generate 1.5 times more return on investment than Dongbu Insurance. However, Leaders Technology is 1.5 times more volatile than Dongbu Insurance Co. It trades about -0.1 of its potential returns per unit of risk. Dongbu Insurance Co is currently generating about -0.27 per unit of risk. If you would invest 29,000 in Leaders Technology Investment on October 28, 2024 and sell it today you would lose (2,200) from holding Leaders Technology Investment or give up 7.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leaders Technology Investment vs. Dongbu Insurance Co
Performance |
| Timeline |
| Leaders Technology |
| Dongbu Insurance |
Leaders Technology and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leaders Technology and Dongbu Insurance
The main advantage of trading using opposite Leaders Technology and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology position performs unexpectedly, Dongbu 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. SK Hynix | Leaders Technology vs. HMM Co |
| Dongbu Insurance vs. KB Financial Group | Dongbu Insurance vs. Shinhan Financial Group | Dongbu Insurance vs. Hana Financial | Dongbu Insurance vs. Woori Financial Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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