Correlation Between Military Insurance and Dong A
Can any of the company-specific risk be diversified away by investing in both Military Insurance and Dong A 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 Military Insurance and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Military Insurance Corp and Dong A Hotel, you can compare the effects of market volatilities on Military Insurance and Dong A 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 Military Insurance with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and Dong A.
Diversification Opportunities for Military Insurance and Dong A
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Military and Dong is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and Dong A Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Hotel and Military Insurance 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 Military Insurance Corp are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Hotel has no effect on the direction of Military Insurance i.e., Military Insurance and Dong A go up and down completely randomly.
Pair Corralation between Military Insurance and Dong A
Assuming the 90 days trading horizon Military Insurance is expected to generate 1.08 times less return on investment than Dong A. But when comparing it to its historical volatility, Military Insurance Corp is 1.34 times less risky than Dong A. It trades about 0.06 of its potential returns per unit of risk. Dong A Hotel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 329,000 in Dong A Hotel on November 20, 2024 and sell it today you would earn a total of 27,000 from holding Dong A Hotel or generate 8.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Military Insurance Corp vs. Dong A Hotel
Performance |
Timeline |
Military Insurance Corp |
Dong A Hotel |
Military Insurance and Dong A Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Military Insurance and Dong A
The main advantage of trading using opposite Military Insurance and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Military Insurance position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.Military Insurance vs. FIT INVEST JSC | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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