Correlation Between Dongbang Ship and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship 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 Dongbang Ship and Korean Reinsurance 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 Korean Reinsurance Co, you can compare the effects of market volatilities on Dongbang Ship 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 Dongbang Ship with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Korean Reinsurance.
Diversification Opportunities for Dongbang Ship and Korean Reinsurance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbang and Korean is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance 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 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 Dongbang Ship i.e., Dongbang Ship and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Dongbang Ship and Korean Reinsurance
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.5 times more return on investment than Korean Reinsurance. However, Dongbang Ship is 1.5 times more volatile than Korean Reinsurance Co. It trades about 0.14 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.09 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. Korean Reinsurance Co
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Korean Reinsurance |
Dongbang Ship and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Korean Reinsurance
The main advantage of trading using opposite Dongbang Ship and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship 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.| 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 |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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