Correlation Between Dongbang Ship and Nongshim
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Nongshim 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 Nongshim 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 Nongshim, you can compare the effects of market volatilities on Dongbang Ship and Nongshim 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 Nongshim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Nongshim.
Diversification Opportunities for Dongbang Ship and Nongshim
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongbang and Nongshim is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Nongshim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongshim 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 Nongshim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongshim has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Nongshim go up and down completely randomly.
Pair Corralation between Dongbang Ship and Nongshim
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.19 times more return on investment than Nongshim. However, Dongbang Ship is 1.19 times more volatile than Nongshim. It trades about 0.03 of its potential returns per unit of risk. Nongshim is currently generating about -0.03 per unit of risk. If you would invest 250,500 in Dongbang Ship Machinery on September 12, 2024 and sell it today you would earn a total of 31,500 from holding Dongbang Ship Machinery or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. Nongshim
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Nongshim |
Dongbang Ship and Nongshim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Nongshim
The main advantage of trading using opposite Dongbang Ship and Nongshim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Nongshim 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 Nongshim will offset losses from the drop in Nongshim's long position.| Dongbang Ship vs. Korea New Network | Dongbang Ship vs. Solution Advanced Technology | Dongbang Ship vs. Busan Industrial Co | Dongbang Ship vs. Busan Ind |
| Nongshim vs. Hankook Furniture Co | Nongshim vs. Nam Hwa Construction | Nongshim vs. SEOJEON ELECTRIC MACHINERY | Nongshim vs. Dongbang Ship Machinery |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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