Correlation Between DB Financial and Seah Steel
Can any of the company-specific risk be diversified away by investing in both DB Financial and Seah 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 Seah 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 Seah Steel Corp, you can compare the effects of market volatilities on DB Financial and Seah 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 Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Seah Steel.
Diversification Opportunities for DB Financial and Seah Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 016610 and Seah is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of DB Financial i.e., DB Financial and Seah Steel go up and down completely randomly.
Pair Corralation between DB Financial and Seah Steel
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.9 times more return on investment than Seah Steel. However, DB Financial Investment is 1.11 times less risky than Seah Steel. It trades about 0.03 of its potential returns per unit of risk. Seah Steel Corp is currently generating about -0.01 per unit of risk. If you would invest 428,905 in DB Financial Investment on September 3, 2024 and sell it today you would earn a total of 87,095 from holding DB Financial Investment or generate 20.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. Seah Steel Corp
Performance |
| Timeline |
| DB Financial Investment |
| Seah Steel Corp |
DB Financial and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Seah Steel
The main advantage of trading using opposite DB Financial and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Seah 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| DB Financial vs. CU Medical Systems | DB Financial vs. Neungyule Education | DB Financial vs. Samsung Publishing Co | DB Financial vs. Dongbang Transport Logistics |
| Seah Steel vs. Ni Steel | Seah Steel vs. Korea Steel Co | Seah Steel vs. Bookook Steel | Seah Steel vs. Finebesteel |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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