Correlation Between DB Financial and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both DB Financial and Dongwon Metal 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 Dongwon Metal 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 Dongwon Metal Co, you can compare the effects of market volatilities on DB Financial and Dongwon Metal 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 Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Dongwon Metal.
Diversification Opportunities for DB Financial and Dongwon Metal
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 016610 and Dongwon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal 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 Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of DB Financial i.e., DB Financial and Dongwon Metal go up and down completely randomly.
Pair Corralation between DB Financial and Dongwon Metal
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.09 times more return on investment than Dongwon Metal. However, DB Financial Investment is 11.63 times less risky than Dongwon Metal. It trades about 0.48 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.3 per unit of risk. If you would invest 519,000 in DB Financial Investment on November 2, 2024 and sell it today you would earn a total of 20,000 from holding DB Financial Investment or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. Dongwon Metal Co
Performance |
| Timeline |
| DB Financial Investment |
| Dongwon Metal |
DB Financial and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Dongwon Metal
The main advantage of trading using opposite DB Financial and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| DB Financial vs. Bookook Steel | DB Financial vs. Samhyun Steel Co | DB Financial vs. Fine Besteel Co | DB Financial vs. Air Busan Co |
| Dongwon Metal vs. KB Financial Group | Dongwon Metal vs. Shinhan Financial Group | Dongwon Metal vs. Hana Financial | Dongwon Metal 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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