Correlation Between DB Insurance and LB Investment
Can any of the company-specific risk be diversified away by investing in both DB Insurance and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on DB Insurance and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and LB Investment.
Diversification Opportunities for DB Insurance and LB Investment
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 005830 and 309960 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of DB Insurance i.e., DB Insurance and LB Investment go up and down completely randomly.
Pair Corralation between DB Insurance and LB Investment
Assuming the 90 days trading horizon DB Insurance Co is expected to generate 1.26 times more return on investment than LB Investment. However, DB Insurance is 1.26 times more volatile than LB Investment. It trades about 0.04 of its potential returns per unit of risk. LB Investment is currently generating about -0.1 per unit of risk. If you would invest 10,560,000 in DB Insurance Co on September 5, 2024 and sell it today you would earn a total of 810,000 from holding DB Insurance Co or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. LB Investment
Performance |
| Timeline |
| DB Insurance |
| LB Investment |
DB Insurance and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and LB Investment
The main advantage of trading using opposite DB Insurance and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| DB Insurance vs. Sam Yang Foods | DB Insurance vs. Organic Special Pet | DB Insurance vs. Dongbang Transport Logistics | DB Insurance vs. Samsung Life Insurance |
| LB Investment vs. Display Tech Co | LB Investment vs. Nice Information Telecommunication | LB Investment vs. Lotte Data Communication | LB Investment vs. Shinsegae Information Communication |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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