Correlation Between DB Insurance and Settlebank
Can any of the company-specific risk be diversified away by investing in both DB Insurance and Settlebank 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 Settlebank 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 Settlebank, you can compare the effects of market volatilities on DB Insurance and Settlebank 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 Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and Settlebank.
Diversification Opportunities for DB Insurance and Settlebank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 005830 and Settlebank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank 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 Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of DB Insurance i.e., DB Insurance and Settlebank go up and down completely randomly.
Pair Corralation between DB Insurance and Settlebank
Assuming the 90 days trading horizon DB Insurance Co is expected to under-perform the Settlebank. But the stock apears to be less risky and, when comparing its historical volatility, DB Insurance Co is 1.01 times less risky than Settlebank. The stock trades about -0.1 of its potential returns per unit of risk. The Settlebank is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,813,000 in Settlebank on November 2, 2024 and sell it today you would lose (412,000) from holding Settlebank or give up 22.72% 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. Settlebank
Performance |
| Timeline |
| DB Insurance |
| Settlebank |
DB Insurance and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and Settlebank
The main advantage of trading using opposite DB Insurance and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank'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 |
| Settlebank vs. DoubleU Games Co | Settlebank vs. Kakao Games Corp | Settlebank vs. Hanwha Chemical Corp | Settlebank vs. KPX Green Chemical |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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