Correlation Between Dongbang Ship and Dongkuk Structures
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Dongkuk Structures 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 Dongkuk Structures 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 Dongkuk Structures Construction, you can compare the effects of market volatilities on Dongbang Ship and Dongkuk Structures 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 Dongkuk Structures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Dongkuk Structures.
Diversification Opportunities for Dongbang Ship and Dongkuk Structures
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongbang and Dongkuk is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Dongkuk Structures Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Structures 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 Dongkuk Structures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Structures has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Dongkuk Structures go up and down completely randomly.
Pair Corralation between Dongbang Ship and Dongkuk Structures
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to under-perform the Dongkuk Structures. But the stock apears to be less risky and, when comparing its historical volatility, Dongbang Ship Machinery is 1.04 times less risky than Dongkuk Structures. The stock trades about -0.08 of its potential returns per unit of risk. The Dongkuk Structures Construction is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 209,000 in Dongkuk Structures Construction on September 14, 2024 and sell it today you would earn a total of 19,500 from holding Dongkuk Structures Construction or generate 9.33% 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. Dongkuk Structures Constructio
Performance |
| Timeline |
| Dongbang Ship Machinery |
| Dongkuk Structures |
Dongbang Ship and Dongkuk Structures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and Dongkuk Structures
The main advantage of trading using opposite Dongbang Ship and Dongkuk Structures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Dongkuk Structures 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 Dongkuk Structures will offset losses from the drop in Dongkuk Structures' 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 |
| Dongkuk Structures vs. BooKook Steel Co | Dongkuk Structures vs. Han Kook Steel | Dongkuk Structures vs. Husteel | Dongkuk Structures vs. Hanshin Construction 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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