Correlation Between KEPCO Engineering and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both KEPCO 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 KEPCO 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 KEPCO Engineering Construction and Dongbang Ship Machinery, you can compare the effects of market volatilities on KEPCO 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 KEPCO Engineering with a short position of Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and Dongbang Ship.
Diversification Opportunities for KEPCO Engineering and Dongbang Ship
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KEPCO and Dongbang is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO 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 KEPCO 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 KEPCO Engineering Construction 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 KEPCO Engineering i.e., KEPCO Engineering and Dongbang Ship go up and down completely randomly.
Pair Corralation between KEPCO Engineering and Dongbang Ship
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to generate 0.62 times more return on investment than Dongbang Ship. However, KEPCO Engineering Construction is 1.61 times less risky than Dongbang Ship. It trades about -0.02 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about -0.03 per unit of risk. If you would invest 6,880,000 in KEPCO Engineering Construction on September 1, 2024 and sell it today you would lose (80,000) from holding KEPCO Engineering Construction or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. Dongbang Ship Machinery
Performance |
| Timeline |
| KEPCO Engineering |
| Dongbang Ship Machinery |
KEPCO Engineering and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and Dongbang Ship
The main advantage of trading using opposite KEPCO Engineering and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO 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.| KEPCO Engineering vs. Samsung CT Corp | KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Kolon Globalco |
| Dongbang Ship vs. Korea New Network | Dongbang Ship vs. ICD Co | Dongbang Ship vs. DYPNF CoLtd | Dongbang Ship vs. Busan Industrial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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