Correlation Between DB Insurance and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both DB Insurance and Keyang Electric 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 DB Insurance and Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DB Insurance Co and Keyang Electric Machinery, you can compare the effects of market volatilities on DB Insurance and Keyang Electric 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 DB Insurance with a short position of Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and Keyang Electric.
Diversification Opportunities for DB Insurance and Keyang Electric
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 005830 and Keyang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery and DB 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 DB Insurance Co are associated (or correlated) with Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of DB Insurance i.e., DB Insurance and Keyang Electric go up and down completely randomly.
Pair Corralation between DB Insurance and Keyang Electric
Assuming the 90 days trading horizon DB Insurance Co is expected to generate 0.94 times more return on investment than Keyang Electric. However, DB Insurance Co is 1.06 times less risky than Keyang Electric. It trades about -0.06 of its potential returns per unit of risk. Keyang Electric Machinery is currently generating about -0.1 per unit of risk. If you would invest 11,690,000 in DB Insurance Co on September 13, 2024 and sell it today you would lose (980,000) from holding DB Insurance Co or give up 8.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. Keyang Electric Machinery
Performance |
| Timeline |
| DB Insurance |
| Keyang Electric Machinery |
DB Insurance and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and Keyang Electric
The main advantage of trading using opposite DB Insurance and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| DB Insurance vs. KB Financial Group | DB Insurance vs. Shinhan Financial Group | DB Insurance vs. Hana Financial | DB Insurance vs. Woori Financial Group |
| Keyang Electric vs. TS Investment Corp | Keyang Electric vs. Korea Shipbuilding Offshore | Keyang Electric vs. DB Insurance Co | Keyang Electric vs. Polaris Office Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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