Correlation Between DB Financial and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both DB Financial and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on DB Financial and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and TOPMATERIAL.
Diversification Opportunities for DB Financial and TOPMATERIAL
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 016610 and TOPMATERIAL is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of DB Financial i.e., DB Financial and TOPMATERIAL go up and down completely randomly.
Pair Corralation between DB Financial and TOPMATERIAL
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.41 times more return on investment than TOPMATERIAL. However, DB Financial Investment is 2.43 times less risky than TOPMATERIAL. It trades about -0.11 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.2 per unit of risk. If you would invest 536,000 in DB Financial Investment on August 31, 2024 and sell it today you would lose (19,000) from holding DB Financial Investment or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Financial Investment vs. TOPMATERIAL LTD
Performance |
| Timeline |
| DB Financial Investment |
| TOPMATERIAL LTD |
DB Financial and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and TOPMATERIAL
The main advantage of trading using opposite DB Financial and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| DB Financial vs. TOPMATERIAL LTD | DB Financial vs. Union Materials Corp | DB Financial vs. SCI Information Service | DB Financial vs. National Plastic Co |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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