Correlation Between DB Insurance and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both DB Insurance and KMH Hitech 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 KMH Hitech 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 KMH Hitech Co, you can compare the effects of market volatilities on DB Insurance and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and KMH Hitech.
Diversification Opportunities for DB Insurance and KMH Hitech
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 005830 and KMH is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of DB Insurance i.e., DB Insurance and KMH Hitech go up and down completely randomly.
Pair Corralation between DB Insurance and KMH Hitech
Assuming the 90 days trading horizon DB Insurance Co is expected to generate 1.09 times more return on investment than KMH Hitech. However, DB Insurance is 1.09 times more volatile than KMH Hitech Co. It trades about 0.05 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.04 per unit of risk. If you would invest 7,722,327 in DB Insurance Co on September 12, 2024 and sell it today you would earn a total of 2,727,673 from holding DB Insurance Co or generate 35.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. KMH Hitech Co
Performance |
| Timeline |
| DB Insurance |
| KMH Hitech |
DB Insurance and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and KMH Hitech
The main advantage of trading using opposite DB Insurance and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech'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 |
| KMH Hitech vs. DB Insurance Co | KMH Hitech vs. Kumho Industrial Co | KMH Hitech vs. LEENO Industrial | KMH Hitech vs. Hyunwoo Industrial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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