Correlation Between Ssangyong Information and Dongbang Ship

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

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

Diversification Opportunities for Ssangyong Information and Dongbang Ship

-0.07

Correlation Coefficient

Ssangyong Information  Dongbang Ship

Good diversification

The 3 months correlation between Ssangyong and Dongbang is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship Machinery and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Dongbang Ship go up and down completely randomly.

Pair Corralation between Ssangyong Information and Dongbang Ship

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to generate 0.71 times more return on investment than Dongbang Ship. However, Ssangyong Information Communication is 1.4 times less risky than Dongbang Ship. It trades about 0.08 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about -0.02 per unit of risk. If you would invest  59,900  in Ssangyong Information Communication on September 12, 2024 and sell it today you would earn a total of  2,300  from holding Ssangyong Information Communication or generate 3.84% return on investment over 90 days.

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

Ssangyong Information Communic  vs.  Dongbang Ship Machinery

Ssangyong Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ssangyong Information Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ssangyong Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dongbang Ship Machinery

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Ship Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongbang Ship sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ssangyong Information and Dongbang Ship

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

The idea behind Ssangyong Information Communication and Dongbang Ship Machinery 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 Global Correlations module to find global opportunities by holding instruments from different markets.