Correlation Between Dongbu Insurance and LG Household
Can any of the company-specific risk be diversified away by investing in both Dongbu Insurance and LG Household 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 Dongbu Insurance and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbu Insurance Co and LG Household Healthcare, you can compare the effects of market volatilities on Dongbu Insurance and LG Household 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 Dongbu Insurance with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Insurance and LG Household.
Diversification Opportunities for Dongbu Insurance and LG Household
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbu and 051900 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Insurance Co and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and Dongbu Insurance 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 Dongbu Insurance Co are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Dongbu Insurance i.e., Dongbu Insurance and LG Household go up and down completely randomly.
Pair Corralation between Dongbu Insurance and LG Household
Assuming the 90 days trading horizon Dongbu Insurance Co is expected to generate 1.14 times more return on investment than LG Household. However, Dongbu Insurance is 1.14 times more volatile than LG Household Healthcare. It trades about 0.06 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.01 per unit of risk. If you would invest 7,731,802 in Dongbu Insurance Co on September 25, 2024 and sell it today you would earn a total of 2,738,198 from holding Dongbu Insurance Co or generate 35.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dongbu Insurance Co vs. LG Household Healthcare
Performance |
Timeline |
Dongbu Insurance |
LG Household Healthcare |
Dongbu Insurance and LG Household Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dongbu Insurance and LG Household
The main advantage of trading using opposite Dongbu Insurance and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Insurance position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household's long position.Dongbu Insurance vs. AptaBio Therapeutics | Dongbu Insurance vs. Wonbang Tech Co | Dongbu Insurance vs. Busan Industrial Co | Dongbu Insurance vs. Busan Ind |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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