Correlation Between Yura Tech and Dongbu Insurance

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

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

Diversification Opportunities for Yura Tech and Dongbu Insurance

-0.64

Correlation Coefficient

Yura Tech  Dongbu Insurance

Excellent diversification

The 3 months correlation between Yura and Dongbu is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Yura Tech 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 Yura Tech 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 Yura Tech 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 Yura Tech i.e., Yura Tech and Dongbu Insurance go up and down completely randomly.

Pair Corralation between Yura Tech and Dongbu Insurance

Assuming the 90 days trading horizon Yura Tech Co is expected to generate 1.55 times more return on investment than Dongbu Insurance. However, Yura Tech is 1.55 times more volatile than Dongbu Insurance Co. It trades about 0.07 of its potential returns per unit of risk. Dongbu Insurance Co is currently generating about -0.05 per unit of risk. If you would invest  760,145  in Yura Tech Co on December 23, 2024 and sell it today you would earn a total of  85,855  from holding Yura Tech Co or generate 11.29% return on investment over 90 days.

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

Yura Tech Co  vs.  Dongbu Insurance Co

Yura Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yura Tech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yura Tech 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 somewhat strong basic indicators, Dongbu Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yura Tech and Dongbu Insurance

The main advantage of trading using opposite Yura Tech and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yura Tech 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 Yura Tech 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.