Correlation Between Dongil Metal and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Dongil Metal 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 Dongil Metal and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongil Metal Co and Dongbang Transport Logistics, you can compare the effects of market volatilities on Dongil Metal 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 Dongil Metal with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongil Metal and Dongbang Transport.
Diversification Opportunities for Dongil Metal and Dongbang Transport
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongil and Dongbang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Dongil Metal 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 Dongil Metal Co 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 Dongil Metal i.e., Dongil Metal and Dongbang Transport go up and down completely randomly.
Pair Corralation between Dongil Metal and Dongbang Transport
Assuming the 90 days trading horizon Dongil Metal Co is expected to under-perform the Dongbang Transport. But the stock apears to be less risky and, when comparing its historical volatility, Dongil Metal Co is 3.07 times less risky than Dongbang Transport. The stock trades about -0.22 of its potential returns per unit of risk. The Dongbang Transport Logistics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 231,500 in Dongbang Transport Logistics on September 1, 2024 and sell it today you would lose (4,000) from holding Dongbang Transport Logistics or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongil Metal Co vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Dongil Metal |
| Dongbang Transport |
Dongil Metal and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongil Metal and Dongbang Transport
The main advantage of trading using opposite Dongil Metal and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongil Metal 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.| Dongil Metal vs. Konan Technology | Dongil Metal vs. Daedong Steel Co | Dongil Metal vs. Kakao Games Corp | Dongil Metal vs. KG Eco Technology |
| Dongbang Transport vs. Infinitt Healthcare Co | Dongbang Transport vs. LG Household Healthcare | Dongbang Transport vs. Cube Entertainment | Dongbang Transport vs. Digital Multimedia Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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