Correlation Between DHP Korea and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both DHP Korea and Dongbu Insurance 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 DHP Korea and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHP Korea Co and Dongbu Insurance Co, you can compare the effects of market volatilities on DHP Korea and Dongbu Insurance 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 DHP Korea with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHP Korea and Dongbu Insurance.
Diversification Opportunities for DHP Korea and Dongbu Insurance
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DHP and Dongbu is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DHP Korea Co and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and DHP Korea 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 DHP Korea Co are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of DHP Korea i.e., DHP Korea and Dongbu Insurance go up and down completely randomly.
Pair Corralation between DHP Korea and Dongbu Insurance
Assuming the 90 days trading horizon DHP Korea is expected to generate 1.57 times less return on investment than Dongbu Insurance. In addition to that, DHP Korea is 1.46 times more volatile than Dongbu Insurance Co. It trades about 0.02 of its total potential returns per unit of risk. Dongbu Insurance Co is currently generating about 0.05 per unit of volatility. If you would invest 7,722,327 in Dongbu Insurance Co on September 12, 2024 and sell it today you would earn a total of 2,727,673 from holding Dongbu Insurance Co or generate 35.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHP Korea Co vs. Dongbu Insurance Co
Performance |
| Timeline |
| DHP Korea |
| Dongbu Insurance |
DHP Korea and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHP Korea and Dongbu Insurance
The main advantage of trading using opposite DHP Korea and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHP Korea position performs unexpectedly, Dongbu Insurance 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| DHP Korea vs. LG Household Healthcare | DHP Korea vs. Intellian Technologies | DHP Korea vs. Hanmi Semiconductor Co | DHP Korea vs. Woori Technology |
| Dongbu Insurance vs. Pureun Mutual Savings | Dongbu Insurance vs. Koryo Credit Information | Dongbu Insurance vs. Incar Financial Service | Dongbu Insurance vs. Hana Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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