Correlation Between Dongbang Transport and Prestige Biologics

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

Diversification Opportunities for Dongbang Transport and Prestige Biologics

0.25

Correlation Coefficient

Dongbang Transport  Prestige Biologics

Modest diversification

The 3 months correlation between Dongbang and Prestige is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Prestige Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Biologics 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 Prestige Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Biologics has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Prestige Biologics go up and down completely randomly.

Pair Corralation between Dongbang Transport and Prestige Biologics

Assuming the 90 days trading horizon Dongbang Transport is expected to generate 1.38 times less return on investment than Prestige Biologics. But when comparing it to its historical volatility, Dongbang Transport Logistics is 2.54 times less risky than Prestige Biologics. It trades about 0.17 of its potential returns per unit of risk. Prestige Biologics Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  455,000  in Prestige Biologics Co on October 26, 2024 and sell it today you would earn a total of  23,000  from holding Prestige Biologics Co or generate 5.05% 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.  Prestige Biologics 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 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.

Prestige Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prestige Biologics Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dongbang Transport and Prestige Biologics

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

The idea behind Dongbang Transport Logistics and Prestige Biologics 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.