Correlation Between Dongbang Ship and Vissem Electronics
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Vissem Electronics 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 Vissem Electronics 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 Vissem Electronics Co, you can compare the effects of market volatilities on Dongbang Ship and Vissem Electronics 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 Vissem Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Vissem Electronics.
Diversification Opportunities for Dongbang Ship and Vissem Electronics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dongbang and Vissem is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Vissem Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vissem Electronics 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 Vissem Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vissem Electronics has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Vissem Electronics go up and down completely randomly.
Pair Corralation between Dongbang Ship and Vissem Electronics
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.46 times more return on investment than Vissem Electronics. However, Dongbang Ship is 1.46 times more volatile than Vissem Electronics Co. It trades about 0.06 of its potential returns per unit of risk. Vissem Electronics Co is currently generating about -0.1 per unit of risk. If you would invest 287,500 in Dongbang Ship Machinery on October 25, 2024 and sell it today you would earn a total of 54,000 from holding Dongbang Ship Machinery or generate 18.78% 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. Vissem Electronics Co
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Vissem Electronics |
Dongbang Ship and Vissem Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Vissem Electronics
The main advantage of trading using opposite Dongbang Ship and Vissem Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Vissem Electronics 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 Vissem Electronics will offset losses from the drop in Vissem Electronics' long position.| Dongbang Ship vs. Samsung Electronics Co | Dongbang Ship vs. Samsung Electronics Co | Dongbang Ship vs. KB Financial Group | Dongbang Ship vs. Shinhan Financial Group |
| Vissem Electronics vs. Samsung Electronics Co | Vissem Electronics vs. Samsung Electronics Co | Vissem Electronics vs. SK Hynix | Vissem Electronics vs. HMM Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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