Correlation Between Dongbang Transport and Netmarble Games

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

Diversification Opportunities for Dongbang Transport and Netmarble Games

0.55

Correlation Coefficient

Dongbang Transport  Netmarble Games

Very weak diversification

The 3 months correlation between Dongbang and Netmarble is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp 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 Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Netmarble Games go up and down completely randomly.

Pair Corralation between Dongbang Transport and Netmarble Games

Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 0.92 times more return on investment than Netmarble Games. However, Dongbang Transport Logistics is 1.09 times less risky than Netmarble Games. It trades about 0.29 of its potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.08 per unit of risk. If you would invest  204,000  in Dongbang Transport Logistics on October 11, 2024 and sell it today you would earn a total of  24,000  from holding Dongbang Transport Logistics or generate 11.76% 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.  Netmarble Games Corp

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Netmarble Games Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netmarble Games Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dongbang Transport and Netmarble Games

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

The idea behind Dongbang Transport Logistics and Netmarble Games Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.