Correlation Between Daejung Chemicals and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Dongbang Transport Logistics, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Dongbang Transport.
Diversification Opportunities for Daejung Chemicals and Dongbang Transport
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Dongbang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and Dongbang Transport go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Dongbang Transport
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.68 times more return on investment than Dongbang Transport. However, Daejung Chemicals Metals is 1.48 times less risky than Dongbang Transport. It trades about 0.12 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about -0.02 per unit of risk. If you would invest 1,217,815 in Daejung Chemicals Metals on October 30, 2024 and sell it today you would earn a total of 102,185 from holding Daejung Chemicals Metals or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Dongbang Transport |
Daejung Chemicals and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Dongbang Transport
The main advantage of trading using opposite Daejung Chemicals and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. Dongwoo Farm To | Daejung Chemicals vs. Lotte Chilsung Beverage | Daejung Chemicals vs. Nam Hwa Construction | Daejung Chemicals vs. Pyung Hwa Industrial |
| Dongbang Transport vs. KB Financial Group | Dongbang Transport vs. Shinhan Financial Group | Dongbang Transport vs. Hana Financial | Dongbang Transport vs. Woori Financial Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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