Correlation Between Dongbang Transport and HJ ShipBuilding

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

Diversification Opportunities for Dongbang Transport and HJ ShipBuilding

0.46

Correlation Coefficient

Dongbang Transport  HJ ShipBuilding

Very weak diversification

The 3 months correlation between Dongbang and 097230 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and HJ ShipBuilding Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HJ ShipBuilding Cons 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 HJ ShipBuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HJ ShipBuilding Cons has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and HJ ShipBuilding go up and down completely randomly.

Pair Corralation between Dongbang Transport and HJ ShipBuilding

Assuming the 90 days trading horizon Dongbang Transport is expected to generate 5.62 times less return on investment than HJ ShipBuilding. But when comparing it to its historical volatility, Dongbang Transport Logistics is 3.08 times less risky than HJ ShipBuilding. It trades about 0.03 of its potential returns per unit of risk. HJ ShipBuilding Construction is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  634,000  in HJ ShipBuilding Construction on December 25, 2024 and sell it today you would earn a total of  79,000  from holding HJ ShipBuilding Construction or generate 12.46% return on investment over 90 days.

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

Dongbang Transport Logistics  vs.  HJ ShipBuilding Construction

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.

HJ ShipBuilding Cons

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HJ ShipBuilding Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HJ ShipBuilding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongbang Transport and HJ ShipBuilding

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

The idea behind Dongbang Transport Logistics and HJ ShipBuilding Construction 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.