Correlation Between Dongbang Ship and N Citron

Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and N Citron 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 Ship and N Citron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongbang Ship Machinery and N Citron, you can compare the effects of market volatilities on Dongbang Ship and N Citron 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 Ship with a short position of N Citron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and N Citron.

Diversification Opportunities for Dongbang Ship and N Citron

-0.44

Correlation Coefficient

Dongbang Ship  N Citron

Very good diversification

The 3 months correlation between Dongbang and 101400 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and N Citron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Citron and Dongbang Ship 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 Ship Machinery are associated (or correlated) with N Citron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Citron has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and N Citron go up and down completely randomly.

Pair Corralation between Dongbang Ship and N Citron

Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to generate 1.78 times more return on investment than N Citron. However, Dongbang Ship is 1.78 times more volatile than N Citron. It trades about 0.18 of its potential returns per unit of risk. N Citron is currently generating about 0.07 per unit of risk. If you would invest  272,500  in Dongbang Ship Machinery on October 7, 2024 and sell it today you would earn a total of  36,500  from holding Dongbang Ship Machinery or generate 13.39% return on investment over 90 days.

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

Dongbang Ship Machinery  vs.  N Citron

Dongbang Ship Machinery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Ship Machinery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongbang Ship may actually be approaching a critical reversion point that can send shares even higher in February 2025.

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron 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 Ship and N Citron

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

The idea behind Dongbang Ship Machinery and N Citron 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.