Correlation Between Dongbang Transport and KyungIn Electronics

Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and KyungIn Electronics 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 Dongbang Transport and KyungIn Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongbang Transport Logistics and KyungIn Electronics Co, you can compare the effects of market volatilities on Dongbang Transport and KyungIn Electronics 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 Dongbang Transport with a short position of KyungIn Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and KyungIn Electronics.

Diversification Opportunities for Dongbang Transport and KyungIn Electronics

-0.16

Correlation Coefficient

Dongbang Transport  KyungIn Electronics

Good diversification

The 3 months correlation between Dongbang and KyungIn is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn Electronics and Dongbang Transport 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 Dongbang Transport Logistics are associated (or correlated) with KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and KyungIn Electronics go up and down completely randomly.

Pair Corralation between Dongbang Transport and KyungIn Electronics

Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the KyungIn Electronics. In addition to that, Dongbang Transport is 1.35 times more volatile than KyungIn Electronics Co. It trades about -0.15 of its total potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.01 per unit of volatility. If you would invest  2,080,000  in KyungIn Electronics Co on September 23, 2024 and sell it today you would lose (60,000) from holding KyungIn Electronics Co or give up 2.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dongbang Transport Logistics  vs.  KyungIn Electronics Co

Dongbang Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongbang Transport Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KyungIn Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KyungIn Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KyungIn Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dongbang Transport and KyungIn Electronics

The main advantage of trading using opposite Dongbang Transport and KyungIn Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, KyungIn Electronics 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 KyungIn Electronics will offset losses from the drop in KyungIn Electronics' long position.

The idea behind Dongbang Transport Logistics and KyungIn Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.