Correlation Between DB Financial and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both DB Financial and LG Chemicals 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 LG Chemicals 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 LG Chemicals, you can compare the effects of market volatilities on DB Financial and LG Chemicals 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 LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and LG Chemicals.
Diversification Opportunities for DB Financial and LG Chemicals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between 016610 and 051910 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of DB Financial i.e., DB Financial and LG Chemicals go up and down completely randomly.
Pair Corralation between DB Financial and LG Chemicals
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.19 times more return on investment than LG Chemicals. However, DB Financial Investment is 5.31 times less risky than LG Chemicals. It trades about 0.48 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. LG Chemicals
Performance |
| Timeline |
| DB Financial Investment |
| LG Chemicals |
DB Financial and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and LG Chemicals
The main advantage of trading using opposite DB Financial and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, LG Chemicals 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 LG Chemicals will offset losses from the drop in LG Chemicals' 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 |
| LG Chemicals vs. DB Financial Investment | LG Chemicals vs. Korea Alcohol Industrial | LG Chemicals vs. DSC Investment | LG Chemicals vs. Golden Bridge Investment |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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