Correlation Between Kisan Telecom and Dongbu Insurance

Can any of the company-specific risk be diversified away by investing in both Kisan Telecom and Dongbu Insurance 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 Kisan Telecom and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kisan Telecom Co and Dongbu Insurance Co, you can compare the effects of market volatilities on Kisan Telecom and Dongbu Insurance 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 Kisan Telecom with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kisan Telecom and Dongbu Insurance.

Diversification Opportunities for Kisan Telecom and Dongbu Insurance

-0.36

Correlation Coefficient

Kisan Telecom  Dongbu Insurance

Very good diversification

The 3 months correlation between Kisan and Dongbu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kisan Telecom Co and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Kisan Telecom 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 Kisan Telecom Co are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Kisan Telecom i.e., Kisan Telecom and Dongbu Insurance go up and down completely randomly.

Pair Corralation between Kisan Telecom and Dongbu Insurance

Assuming the 90 days trading horizon Kisan Telecom Co is expected to generate 4.4 times more return on investment than Dongbu Insurance. However, Kisan Telecom is 4.4 times more volatile than Dongbu Insurance Co. It trades about 0.14 of its potential returns per unit of risk. Dongbu Insurance Co is currently generating about -0.28 per unit of risk. If you would invest  175,300  in Kisan Telecom Co on December 10, 2024 and sell it today you would earn a total of  28,700  from holding Kisan Telecom Co or generate 16.37% return on investment over 90 days.

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

Kisan Telecom Co  vs.  Dongbu Insurance Co

Kisan Telecom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kisan Telecom Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kisan Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.

Dongbu Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongbu Insurance Co 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 Kisan Telecom and Dongbu Insurance

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

The idea behind Kisan Telecom Co and Dongbu Insurance 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.