Correlation Between DB Financial and Raontech
Can any of the company-specific risk be diversified away by investing in both DB Financial and Raontech 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 Raontech 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 Raontech, you can compare the effects of market volatilities on DB Financial and Raontech 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 Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Raontech.
Diversification Opportunities for DB Financial and Raontech
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 016610 and Raontech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of DB Financial i.e., DB Financial and Raontech go up and down completely randomly.
Pair Corralation between DB Financial and Raontech
Assuming the 90 days trading horizon DB Financial Investment is expected to generate 1.2 times more return on investment than Raontech. However, DB Financial is 1.2 times more volatile than Raontech. It trades about 0.04 of its potential returns per unit of risk. Raontech is currently generating about -0.14 per unit of risk. If you would invest 493,500 in DB Financial Investment on September 2, 2024 and sell it today you would earn a total of 22,500 from holding DB Financial Investment or generate 4.56% 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. Raontech
Performance |
| Timeline |
| DB Financial Investment |
| Raontech |
DB Financial and Raontech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Financial and Raontech
The main advantage of trading using opposite DB Financial and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.| DB Financial vs. Samsung Electronics Co | DB Financial vs. Samsung Electronics Co | DB Financial vs. KB Financial Group | DB Financial vs. Shinhan Financial Group |
| Raontech vs. Samsung Electronics Co | Raontech vs. Samsung Electronics Co | Raontech vs. LG Energy Solution | Raontech 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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