Correlation Between DB Financial and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both DB Financial and Bohae Brewery 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 Financial and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DB Financial Investment and Bohae Brewery, you can compare the effects of market volatilities on DB Financial and Bohae Brewery 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 Financial with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Bohae Brewery.
Diversification Opportunities for DB Financial and Bohae Brewery
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between 016610 and Bohae is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and DB Financial 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 Financial Investment are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of DB Financial i.e., DB Financial and Bohae Brewery go up and down completely randomly.
Pair Corralation between DB Financial and Bohae Brewery
Assuming the 90 days trading horizon DB Financial Investment is expected to under-perform the Bohae Brewery. But the stock apears to be less risky and, when comparing its historical volatility, DB Financial Investment is 5.44 times less risky than Bohae Brewery. The stock trades about -0.12 of its potential returns per unit of risk. The Bohae Brewery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 42,500 in Bohae Brewery on August 30, 2024 and sell it today you would earn a total of 3,100 from holding Bohae Brewery or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. Bohae Brewery
Performance |
| Timeline |
| DB Financial Investment |
| Bohae Brewery |
DB Financial and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Bohae Brewery
The main advantage of trading using opposite DB Financial and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| DB Financial vs. Hannong Chemicals | DB Financial vs. Tway Air Co | DB Financial vs. Haitai Confectionery Foods | DB Financial vs. Innowireless Co |
| Bohae Brewery vs. Samsung Electronics Co | Bohae Brewery vs. Samsung Electronics Co | Bohae Brewery vs. Hyundai Motor Co | Bohae Brewery vs. Hyundai Motor |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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