Correlation Between Dongbang Transport and Taewoong Logistics
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Taewoong Logistics 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 Taewoong Logistics 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 Taewoong Logistics CoLtd, you can compare the effects of market volatilities on Dongbang Transport and Taewoong Logistics 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 Taewoong Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Taewoong Logistics.
Diversification Opportunities for Dongbang Transport and Taewoong Logistics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongbang and Taewoong is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Taewoong Logistics go up and down completely randomly.
Pair Corralation between Dongbang Transport and Taewoong Logistics
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the Taewoong Logistics. In addition to that, Dongbang Transport is 1.22 times more volatile than Taewoong Logistics CoLtd. It trades about -0.11 of its total potential returns per unit of risk. Taewoong Logistics CoLtd is currently generating about -0.05 per unit of volatility. If you would invest 306,500 in Taewoong Logistics CoLtd on September 26, 2024 and sell it today you would lose (11,500) from holding Taewoong Logistics CoLtd or give up 3.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Dongbang Transport Logistics vs. Taewoong Logistics CoLtd
Performance |
Timeline |
Dongbang Transport |
Taewoong Logistics CoLtd |
Dongbang Transport and Taewoong Logistics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dongbang Transport and Taewoong Logistics
The main advantage of trading using opposite Dongbang Transport and Taewoong Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Taewoong Logistics 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 Taewoong Logistics will offset losses from the drop in Taewoong Logistics' long position.Dongbang Transport vs. EBEST Investment Securities | Dongbang Transport vs. Daelim Trading Co | Dongbang Transport vs. Jeju Semiconductor Corp | Dongbang Transport vs. Korea Investment Holdings |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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