Correlation Between Worldex Industry and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Worldex Industry and Dongbang Transport 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 Worldex Industry and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldex Industry Trading and Dongbang Transport Logistics, you can compare the effects of market volatilities on Worldex Industry and Dongbang Transport 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 Worldex Industry with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldex Industry and Dongbang Transport.
Diversification Opportunities for Worldex Industry and Dongbang Transport
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Worldex and Dongbang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Worldex Industry 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 Worldex Industry Trading are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Worldex Industry i.e., Worldex Industry and Dongbang Transport go up and down completely randomly.
Pair Corralation between Worldex Industry and Dongbang Transport
Assuming the 90 days trading horizon Worldex Industry Trading is expected to under-perform the Dongbang Transport. In addition to that, Worldex Industry is 1.61 times more volatile than Dongbang Transport Logistics. It trades about -0.15 of its total potential returns per unit of risk. Dongbang Transport Logistics is currently generating about -0.17 per unit of volatility. If you would invest 224,500 in Dongbang Transport Logistics on November 5, 2024 and sell it today you would lose (9,000) from holding Dongbang Transport Logistics or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldex Industry Trading vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Worldex Industry Trading |
| Dongbang Transport |
Worldex Industry and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldex Industry and Dongbang Transport
The main advantage of trading using opposite Worldex Industry and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.| Worldex Industry vs. Samsung Electronics Co | Worldex Industry vs. Samsung Electronics Co | Worldex Industry vs. Hyundai Motor Co | Worldex Industry vs. Hyundai Motor |
| Dongbang Transport vs. Seoul Electronics Telecom | Dongbang Transport vs. Samlip General Foods | Dongbang Transport vs. SK Telecom Co | Dongbang Transport vs. Jin Air 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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