Correlation Between DB Financial and Poongsan
Can any of the company-specific risk be diversified away by investing in both DB Financial and Poongsan 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 Poongsan 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 Poongsan, you can compare the effects of market volatilities on DB Financial and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Poongsan.
Diversification Opportunities for DB Financial and Poongsan
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 016610 and Poongsan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of DB Financial i.e., DB Financial and Poongsan go up and down completely randomly.
Pair Corralation between DB Financial and Poongsan
Assuming the 90 days trading horizon DB Financial is expected to generate 2.0 times less return on investment than Poongsan. But when comparing it to its historical volatility, DB Financial Investment is 1.54 times less risky than Poongsan. It trades about 0.03 of its potential returns per unit of risk. Poongsan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,545,000 in Poongsan on October 16, 2024 and sell it today you would earn a total of 1,685,000 from holding Poongsan or generate 47.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. Poongsan
Performance |
| Timeline |
| DB Financial Investment |
| Poongsan |
DB Financial and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Poongsan
The main advantage of trading using opposite DB Financial and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| DB Financial vs. Lotte Non Life Insurance | DB Financial vs. EBEST Investment Securities | DB Financial vs. Alton Sports CoLtd | DB Financial vs. LG Display Co |
| Poongsan vs. KakaoBank Corp | Poongsan vs. LG Chemicals | Poongsan vs. Jb Financial | Poongsan vs. DB Financial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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