Correlation Between Dongbang Ship and RPBio
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and RPBio 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 RPBio 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 RPBio Inc, you can compare the effects of market volatilities on Dongbang Ship and RPBio 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 RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and RPBio.
Diversification Opportunities for Dongbang Ship and RPBio
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongbang and RPBio is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc 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 RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and RPBio go up and down completely randomly.
Pair Corralation between Dongbang Ship and RPBio
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.08 times more return on investment than RPBio. However, Dongbang Ship is 1.08 times more volatile than RPBio Inc. It trades about -0.03 of its potential returns per unit of risk. RPBio Inc is currently generating about -0.16 per unit of risk. If you would invest 290,000 in Dongbang Ship Machinery on September 1, 2024 and sell it today you would lose (9,000) from holding Dongbang Ship Machinery or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. RPBio Inc
Performance |
| Timeline |
| Dongbang Ship Machinery |
| RPBio Inc |
Dongbang Ship and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and RPBio
The main advantage of trading using opposite Dongbang Ship and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio'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 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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