Correlation Between Dongbang Ship and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Iljin Materials 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 Iljin Materials 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 Iljin Materials Co, you can compare the effects of market volatilities on Dongbang Ship and Iljin Materials 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 Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Iljin Materials.
Diversification Opportunities for Dongbang Ship and Iljin Materials
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbang and Iljin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials 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 Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Iljin Materials go up and down completely randomly.
Pair Corralation between Dongbang Ship and Iljin Materials
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 0.97 times more return on investment than Iljin Materials. However, Dongbang Ship Machinery is 1.03 times less risky than Iljin Materials. It trades about -0.08 of its potential returns per unit of risk. Iljin Materials Co is currently generating about -0.31 per unit of risk. If you would invest 310,000 in Dongbang Ship Machinery on September 14, 2024 and sell it today you would lose (21,500) from holding Dongbang Ship Machinery or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. Iljin Materials Co
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Iljin Materials |
Dongbang Ship and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Iljin Materials
The main advantage of trading using opposite Dongbang Ship and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Iljin Materials 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 Iljin Materials will offset losses from the drop in Iljin Materials' 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 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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