Correlation Between Dongbang Transport and Hyunwoo Industrial

Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Hyunwoo Industrial 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 Hyunwoo Industrial 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 Hyunwoo Industrial Co, you can compare the effects of market volatilities on Dongbang Transport and Hyunwoo Industrial 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 Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Hyunwoo Industrial.

Diversification Opportunities for Dongbang Transport and Hyunwoo Industrial

0.35

Correlation Coefficient

Dongbang Transport  Hyunwoo Industrial

Weak diversification

The 3 months correlation between Dongbang and Hyunwoo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial 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 Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Hyunwoo Industrial go up and down completely randomly.

Pair Corralation between Dongbang Transport and Hyunwoo Industrial

Assuming the 90 days trading horizon Dongbang Transport is expected to generate 2.4 times less return on investment than Hyunwoo Industrial. In addition to that, Dongbang Transport is 1.02 times more volatile than Hyunwoo Industrial Co. It trades about 0.03 of its total potential returns per unit of risk. Hyunwoo Industrial Co is currently generating about 0.08 per unit of volatility. If you would invest  257,000  in Hyunwoo Industrial Co on December 25, 2024 and sell it today you would earn a total of  22,000  from holding Hyunwoo Industrial Co or generate 8.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dongbang Transport Logistics  vs.  Hyunwoo Industrial Co

Dongbang Transport

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Transport Logistics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongbang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyunwoo Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyunwoo Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyunwoo Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dongbang Transport and Hyunwoo Industrial

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

The idea behind Dongbang Transport Logistics and Hyunwoo Industrial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.