Correlation Between DB Financial and Korea Air
Can any of the company-specific risk be diversified away by investing in both DB Financial and Korea Air 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 Korea Air 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 Korea Air Svc, you can compare the effects of market volatilities on DB Financial and Korea Air 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 Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Korea Air.
Diversification Opportunities for DB Financial and Korea Air
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 016610 and Korea is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc 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 Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of DB Financial i.e., DB Financial and Korea Air go up and down completely randomly.
Pair Corralation between DB Financial and Korea Air
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.98 times more return on investment than Korea Air. However, DB Financial Investment is 1.02 times less risky than Korea Air. It trades about 0.08 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.05 per unit of risk. If you would invest 414,500 in DB Financial Investment on September 3, 2024 and sell it today you would earn a total of 101,500 from holding DB Financial Investment or generate 24.49% 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. Korea Air Svc
Performance |
| Timeline |
| DB Financial Investment |
| Korea Air Svc |
DB Financial and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Korea Air
The main advantage of trading using opposite DB Financial and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Korea Air 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 Korea Air will offset losses from the drop in Korea Air's long position.| DB Financial vs. CU Medical Systems | DB Financial vs. Neungyule Education | DB Financial vs. Samsung Publishing Co | DB Financial vs. Dongbang Transport Logistics |
| Korea Air vs. Incar Financial Service | Korea Air vs. Jeju Bank | Korea Air vs. DB Financial Investment | Korea Air vs. Wireless Power Amplifier |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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