Correlation Between Dongbang Ship and Taekwang Ind
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Taekwang Ind 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 Dongbang Ship and Taekwang Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Ship Machinery and Taekwang Ind, you can compare the effects of market volatilities on Dongbang Ship and Taekwang Ind 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 Dongbang Ship with a short position of Taekwang Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Taekwang Ind.
Diversification Opportunities for Dongbang Ship and Taekwang Ind
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongbang and Taekwang is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Taekwang Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taekwang Ind and Dongbang Ship 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 Dongbang Ship Machinery are associated (or correlated) with Taekwang Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taekwang Ind has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Taekwang Ind go up and down completely randomly.
Pair Corralation between Dongbang Ship and Taekwang Ind
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.89 times more return on investment than Taekwang Ind. However, Dongbang Ship is 1.89 times more volatile than Taekwang Ind. It trades about 0.05 of its potential returns per unit of risk. Taekwang Ind is currently generating about -0.02 per unit of risk. If you would invest 304,500 in Dongbang Ship Machinery on October 26, 2024 and sell it today you would earn a total of 19,000 from holding Dongbang Ship Machinery or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. Taekwang Ind
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Taekwang Ind |
Dongbang Ship and Taekwang Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Taekwang Ind
The main advantage of trading using opposite Dongbang Ship and Taekwang Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Taekwang Ind 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 Taekwang Ind will offset losses from the drop in Taekwang Ind's long position.| Dongbang Ship vs. Chorokbaem Healthcare Co | Dongbang Ship vs. SeAH Besteel Corp | Dongbang Ship vs. Fine Besteel Co | Dongbang Ship vs. Korea Steel Co |
| Taekwang Ind vs. Handok Clean Tech | Taekwang Ind vs. SEOJEON ELECTRIC MACHINERY | Taekwang Ind vs. Clean Science co | Taekwang Ind vs. CG Hi Tech |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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