Correlation Between Iljin Materials and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both Iljin Materials 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 Iljin Materials and Dongbang Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Dongbang Ship Machinery, you can compare the effects of market volatilities on Iljin Materials 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 Iljin Materials with a short position of Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Dongbang Ship.
Diversification Opportunities for Iljin Materials and Dongbang Ship
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iljin and Dongbang is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co 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 Iljin Materials 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 Iljin Materials Co 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 Iljin Materials i.e., Iljin Materials and Dongbang Ship go up and down completely randomly.
Pair Corralation between Iljin Materials and Dongbang Ship
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Dongbang Ship. In addition to that, Iljin Materials is 1.16 times more volatile than Dongbang Ship Machinery. It trades about -0.08 of its total potential returns per unit of risk. Dongbang Ship Machinery is currently generating about 0.24 per unit of volatility. If you would invest 308,500 in Dongbang Ship Machinery on October 21, 2024 and sell it today you would earn a total of 29,000 from holding Dongbang Ship Machinery or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Materials Co vs. Dongbang Ship Machinery
Performance |
| Timeline |
| Iljin Materials |
| Dongbang Ship Machinery |
Iljin Materials and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and Dongbang Ship
The main advantage of trading using opposite Iljin Materials and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials 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.| Iljin Materials vs. Tae Kyung Chemical | Iljin Materials vs. Youl Chon Chemical | Iljin Materials vs. Hankukpackage Co | Iljin Materials vs. Mgame Corp |
| Dongbang Ship vs. WONIK Materials CoLtd | Dongbang Ship vs. Digital Power Communications | Dongbang Ship vs. Ecoplastic | Dongbang Ship vs. National Plastic 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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