Correlation Between DB Financial and Dream Security
Can any of the company-specific risk be diversified away by investing in both DB Financial and Dream Security 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 Dream Security 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 Dream Security co, you can compare the effects of market volatilities on DB Financial and Dream Security 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 Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Dream Security.
Diversification Opportunities for DB Financial and Dream Security
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 016610 and Dream is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co 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 Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of DB Financial i.e., DB Financial and Dream Security go up and down completely randomly.
Pair Corralation between DB Financial and Dream Security
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.11 times more return on investment than Dream Security. However, DB Financial Investment is 9.01 times less risky than Dream Security. It trades about 0.48 of its potential returns per unit of risk. Dream Security co is currently generating about -0.13 per unit of risk. If you would invest 519,000 in DB Financial Investment on November 1, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. Dream Security co
Performance |
| Timeline |
| DB Financial Investment |
| Dream Security co |
DB Financial and Dream Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Dream Security
The main advantage of trading using opposite DB Financial and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Dream Security 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 Dream Security will offset losses from the drop in Dream Security's long position.| DB Financial vs. Insung Information Co | DB Financial vs. Duksan Hi Metal | DB Financial vs. Youngsin Metal Industrial | DB Financial vs. Dongil Metal Co |
| Dream Security vs. Lotte Data Communication | Dream Security vs. KakaoBank Corp | Dream Security vs. Hana Financial | Dream Security 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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