Correlation Between DB Insurance and Digital Power
Can any of the company-specific risk be diversified away by investing in both DB Insurance and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on DB Insurance and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and Digital Power.
Diversification Opportunities for DB Insurance and Digital Power
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 005830 and Digital is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of DB Insurance i.e., DB Insurance and Digital Power go up and down completely randomly.
Pair Corralation between DB Insurance and Digital Power
Assuming the 90 days trading horizon DB Insurance Co is expected to under-perform the Digital Power. In addition to that, DB Insurance is 1.21 times more volatile than Digital Power Communications. It trades about -0.1 of its total potential returns per unit of risk. Digital Power Communications is currently generating about -0.02 per unit of volatility. If you would invest 863,112 in Digital Power Communications on November 2, 2024 and sell it today you would lose (45,112) from holding Digital Power Communications or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. Digital Power Communications
Performance |
| Timeline |
| DB Insurance |
| Digital Power Commun |
DB Insurance and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and Digital Power
The main advantage of trading using opposite DB Insurance and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| DB Insurance vs. Atinum Investment Co | DB Insurance vs. Hanjin Transportation Co | DB Insurance vs. Korea Investment Holdings | DB Insurance vs. SK Chemicals Co |
| Digital Power vs. Inzi Display CoLtd | Digital Power vs. Tuksu Engineering ConstructionLtd | Digital Power vs. Korea Computer | Digital Power vs. LG Display Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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