Correlation Between HMM and DB Financial
Can any of the company-specific risk be diversified away by investing in both HMM and DB Financial 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 HMM and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and DB Financial Investment, you can compare the effects of market volatilities on HMM and DB Financial 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 HMM with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and DB Financial.
Diversification Opportunities for HMM and DB Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HMM and 016610 is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment and HMM 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 HMM Co are associated (or correlated) with DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of HMM i.e., HMM and DB Financial go up and down completely randomly.
Pair Corralation between HMM and DB Financial
Assuming the 90 days trading horizon HMM Co is expected to generate 1.18 times more return on investment than DB Financial. However, HMM is 1.18 times more volatile than DB Financial Investment. It trades about 0.32 of its potential returns per unit of risk. DB Financial Investment is currently generating about 0.12 per unit of risk. If you would invest 1,602,000 in HMM Co on September 13, 2024 and sell it today you would earn a total of 275,000 from holding HMM Co or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. DB Financial Investment
Performance |
| Timeline |
| HMM Co |
| DB Financial Investment |
HMM and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and DB Financial
The main advantage of trading using opposite HMM and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, DB Financial 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 DB Financial will offset losses from the drop in DB Financial's long position.| HMM vs. Korea New Network | HMM vs. Solution Advanced Technology | HMM vs. Busan Industrial Co | HMM vs. Busan Ind |
| DB Financial vs. KB Financial Group | DB Financial vs. Shinhan Financial Group | DB Financial vs. Hana Financial | DB Financial vs. Woori Financial Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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