Correlation Between Dongwoo Farm and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Korean Reinsurance 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 Dongwoo Farm and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Korean Reinsurance Co, you can compare the effects of market volatilities on Dongwoo Farm and Korean Reinsurance 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 Dongwoo Farm with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Korean Reinsurance.
Diversification Opportunities for Dongwoo Farm and Korean Reinsurance
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongwoo and Korean is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Dongwoo Farm 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 Dongwoo Farm To are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Korean Reinsurance
Assuming the 90 days trading horizon Dongwoo Farm is expected to generate 36.9 times less return on investment than Korean Reinsurance. But when comparing it to its historical volatility, Dongwoo Farm To is 1.7 times less risky than Korean Reinsurance. It trades about 0.0 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 803,000 in Korean Reinsurance Co on November 3, 2024 and sell it today you would earn a total of 21,000 from holding Korean Reinsurance Co or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Korean Reinsurance Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Korean Reinsurance |
Dongwoo Farm and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Korean Reinsurance
The main advantage of trading using opposite Dongwoo Farm and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Dongwoo Farm vs. Daiyang Metal Co | Dongwoo Farm vs. Ssangyong Information Communication | Dongwoo Farm vs. Heungkuk Metaltech CoLtd | Dongwoo Farm vs. Choil Aluminum |
| Korean Reinsurance vs. KyungIn Electronics Co | Korean Reinsurance vs. Daeduck Electronics Co | Korean Reinsurance vs. Seoul Electronics Telecom | Korean Reinsurance vs. Daewoo Electronic Components |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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