Correlation Between DB Insurance and HSD Engine
Can any of the company-specific risk be diversified away by investing in both DB Insurance and HSD Engine 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 HSD Engine 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 HSD Engine Co, you can compare the effects of market volatilities on DB Insurance and HSD Engine 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 HSD Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and HSD Engine.
Diversification Opportunities for DB Insurance and HSD Engine
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 005830 and HSD is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and HSD Engine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSD Engine 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 HSD Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSD Engine has no effect on the direction of DB Insurance i.e., DB Insurance and HSD Engine go up and down completely randomly.
Pair Corralation between DB Insurance and HSD Engine
Assuming the 90 days trading horizon DB Insurance Co is expected to under-perform the HSD Engine. But the stock apears to be less risky and, when comparing its historical volatility, DB Insurance Co is 2.65 times less risky than HSD Engine. The stock trades about -0.08 of its potential returns per unit of risk. The HSD Engine Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,280,000 in HSD Engine Co on November 28, 2024 and sell it today you would earn a total of 45,000 from holding HSD Engine Co or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. HSD Engine Co
Performance |
| Timeline |
| DB Insurance |
| HSD Engine |
DB Insurance and HSD Engine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and HSD Engine
The main advantage of trading using opposite DB Insurance and HSD Engine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, HSD Engine 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 HSD Engine will offset losses from the drop in HSD Engine's long position.| DB Insurance vs. Ssangyong Materials Corp | DB Insurance vs. INNOX Advanced Materials | DB Insurance vs. Kg Chemical | DB Insurance vs. Hansol Chemical Co |
| HSD Engine vs. Busan Industrial Co | HSD Engine vs. Busan Ind | HSD Engine vs. Mirae Asset Daewoo | HSD Engine vs. UNISEM 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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