Correlation Between DB Financial and BGF Retail
Can any of the company-specific risk be diversified away by investing in both DB Financial and BGF Retail 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 BGF Retail 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 BGF Retail Co, you can compare the effects of market volatilities on DB Financial and BGF Retail 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 BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and BGF Retail.
Diversification Opportunities for DB Financial and BGF Retail
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 016610 and BGF is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail 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 BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of DB Financial i.e., DB Financial and BGF Retail go up and down completely randomly.
Pair Corralation between DB Financial and BGF Retail
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.88 times more return on investment than BGF Retail. However, DB Financial Investment is 1.14 times less risky than BGF Retail. It trades about 0.04 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.05 per unit of risk. If you would invest 408,677 in DB Financial Investment on November 8, 2024 and sell it today you would earn a total of 133,323 from holding DB Financial Investment or generate 32.62% 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. BGF Retail Co
Performance |
| Timeline |
| DB Financial Investment |
| BGF Retail |
DB Financial and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and BGF Retail
The main advantage of trading using opposite DB Financial and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| DB Financial vs. SK Chemicals Co | DB Financial vs. JC Chemical Co | DB Financial vs. Bosung Power Technology | DB Financial vs. Kg Chemical |
| BGF Retail vs. Automobile Pc | BGF Retail vs. T3 Entertainment Co | BGF Retail vs. Polaris Office Corp | BGF Retail vs. ITM Semiconductor Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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