Correlation Between Lindeman Asia and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Lindeman Asia 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 Lindeman Asia and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and Dongbu Insurance Co, you can compare the effects of market volatilities on Lindeman Asia 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 Lindeman Asia with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and Dongbu Insurance.
Diversification Opportunities for Lindeman Asia and Dongbu Insurance
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindeman and Dongbu is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Lindeman Asia 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 Lindeman Asia Investment 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 Lindeman Asia i.e., Lindeman Asia and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Lindeman Asia and Dongbu Insurance
Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the Dongbu Insurance. In addition to that, Lindeman Asia is 1.61 times more volatile than Dongbu Insurance Co. It trades about -0.03 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 7,580,198 in Dongbu Insurance Co on August 31, 2024 and sell it today you would earn a total of 3,339,802 from holding Dongbu Insurance Co or generate 44.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindeman Asia Investment vs. Dongbu Insurance Co
Performance |
| Timeline |
| Lindeman Asia Investment |
| Dongbu Insurance |
Lindeman Asia and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindeman Asia and Dongbu Insurance
The main advantage of trading using opposite Lindeman Asia and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia 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.| Lindeman Asia vs. Hanwha InvestmentSecurities Co | Lindeman Asia vs. Solution Advanced Technology | Lindeman Asia vs. Busan Industrial Co | Lindeman Asia vs. Busan Ind |
| Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Daewoo SBI SPAC | Dongbu Insurance vs. Dream Security co | Dongbu Insurance vs. Microfriend |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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