Correlation Between Tuksu Engineering and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both Tuksu Engineering 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 Tuksu Engineering and Dongbang Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tuksu Engineering ConstructionLtd and Dongbang Ship Machinery, you can compare the effects of market volatilities on Tuksu Engineering 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 Tuksu Engineering with a short position of Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tuksu Engineering and Dongbang Ship.
Diversification Opportunities for Tuksu Engineering and Dongbang Ship
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tuksu and Dongbang is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tuksu Engineering Construction 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 Tuksu Engineering 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 Tuksu Engineering ConstructionLtd 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 Tuksu Engineering i.e., Tuksu Engineering and Dongbang Ship go up and down completely randomly.
Pair Corralation between Tuksu Engineering and Dongbang Ship
Assuming the 90 days trading horizon Tuksu Engineering is expected to generate 1.73 times less return on investment than Dongbang Ship. But when comparing it to its historical volatility, Tuksu Engineering ConstructionLtd is 1.37 times less risky than Dongbang Ship. It trades about 0.12 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 301,500 in Dongbang Ship Machinery on November 3, 2024 and sell it today you would earn a total of 18,500 from holding Dongbang Ship Machinery or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tuksu Engineering Construction vs. Dongbang Ship Machinery
Performance |
| Timeline |
| Tuksu Engineering |
| Dongbang Ship Machinery |
Tuksu Engineering and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tuksu Engineering and Dongbang Ship
The main advantage of trading using opposite Tuksu Engineering and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tuksu Engineering 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.| Tuksu Engineering vs. Dongkuk Structures Construction | Tuksu Engineering vs. KT Submarine Telecom | Tuksu Engineering vs. GS Engineering Construction | Tuksu Engineering vs. ENERGYMACHINERY KOREA CoLtd |
| Dongbang Ship vs. Lotte Chilsung Beverage | Dongbang Ship vs. Alton Sports CoLtd | Dongbang Ship vs. Lotte Rental Co | Dongbang Ship vs. V One Tech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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