Correlation Between DB Financial and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both DB Financial and Daechang Steel 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 Daechang Steel 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 Daechang Steel Co, you can compare the effects of market volatilities on DB Financial and Daechang Steel 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 Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Daechang Steel.
Diversification Opportunities for DB Financial and Daechang Steel
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 016610 and Daechang is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang Steel 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 Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of DB Financial i.e., DB Financial and Daechang Steel go up and down completely randomly.
Pair Corralation between DB Financial and Daechang Steel
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.35 times more return on investment than Daechang Steel. However, DB Financial Investment is 2.89 times less risky than Daechang Steel. It trades about 0.52 of its potential returns per unit of risk. Daechang Steel Co is currently generating about -0.04 per unit of risk. If you would invest 517,000 in DB Financial Investment on October 30, 2024 and sell it today you would earn a total of 22,000 from holding DB Financial Investment or generate 4.26% 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. Daechang Steel Co
Performance |
| Timeline |
| DB Financial Investment |
| Daechang Steel |
DB Financial and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Daechang Steel
The main advantage of trading using opposite DB Financial and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Daechang Steel 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| DB Financial vs. Hanjoo Light Metal | DB Financial vs. Duksan Hi Metal | DB Financial vs. Netmarble Games Corp | DB Financial vs. Kukil Metal Co |
| Daechang Steel vs. INNOX Advanced Materials | Daechang Steel vs. LAKE MATERIALS LTD | Daechang Steel vs. Shinsegae Engineering Construction | Daechang Steel vs. Hyundai Engineering Construction |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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