Correlation Between Dongbang Ship and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and KEPCO Engineering 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 KEPCO Engineering 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 KEPCO Engineering Construction, you can compare the effects of market volatilities on Dongbang Ship and KEPCO Engineering 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 KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and KEPCO Engineering.
Diversification Opportunities for Dongbang Ship and KEPCO Engineering
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and KEPCO is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering 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 KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Dongbang Ship and KEPCO Engineering
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to under-perform the KEPCO Engineering. In addition to that, Dongbang Ship is 1.61 times more volatile than KEPCO Engineering Construction. It trades about -0.03 of its total potential returns per unit of risk. KEPCO Engineering Construction is currently generating about -0.02 per unit of volatility. If you would invest 6,880,000 in KEPCO Engineering Construction on September 1, 2024 and sell it today you would lose (80,000) from holding KEPCO Engineering Construction or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Dongbang Ship Machinery |
| KEPCO Engineering |
Dongbang Ship and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and KEPCO Engineering
The main advantage of trading using opposite Dongbang Ship and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| Dongbang Ship vs. Korea New Network | Dongbang Ship vs. ICD Co | Dongbang Ship vs. DYPNF CoLtd | Dongbang Ship vs. Busan Industrial Co |
| KEPCO Engineering vs. Samsung CT Corp | KEPCO Engineering vs. Hyundai Engineering Construction | KEPCO Engineering vs. Kolon Globalco |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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