Correlation Between DB Financial and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both DB Financial and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on DB Financial and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Seoam Machinery.
Diversification Opportunities for DB Financial and Seoam Machinery
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 016610 and Seoam is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of DB Financial i.e., DB Financial and Seoam Machinery go up and down completely randomly.
Pair Corralation between DB Financial and Seoam Machinery
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.81 times more return on investment than Seoam Machinery. However, DB Financial Investment is 1.23 times less risky than Seoam Machinery. It trades about 0.08 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.04 per unit of risk. If you would invest 412,000 in DB Financial Investment on September 2, 2024 and sell it today you would earn a total of 104,000 from holding DB Financial Investment or generate 25.24% 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. Seoam Machinery Industry
Performance |
| Timeline |
| DB Financial Investment |
| Seoam Machinery Industry |
DB Financial and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Seoam Machinery
The main advantage of trading using opposite DB Financial and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| DB Financial vs. Samsung Electronics Co | DB Financial vs. Samsung Electronics Co | DB Financial vs. KB Financial Group | DB Financial vs. Shinhan Financial Group |
| Seoam Machinery vs. Display Tech Co | Seoam Machinery vs. Youl Chon Chemical | Seoam Machinery vs. Digital Power Communications | Seoam Machinery vs. Sung Bo Chemicals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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