Correlation Between SBI Investment and DSC Investment
Can any of the company-specific risk be diversified away by investing in both SBI Investment and DSC Investment 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 SBI Investment and DSC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and DSC Investment, you can compare the effects of market volatilities on SBI Investment and DSC Investment 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 SBI Investment with a short position of DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and DSC Investment.
Diversification Opportunities for SBI Investment and DSC Investment
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBI and DSC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of SBI Investment i.e., SBI Investment and DSC Investment go up and down completely randomly.
Pair Corralation between SBI Investment and DSC Investment
Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the DSC Investment. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 4.56 times less risky than DSC Investment. The stock trades about -0.2 of its potential returns per unit of risk. The DSC Investment is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 286,500 in DSC Investment on November 18, 2024 and sell it today you would earn a total of 156,000 from holding DSC Investment or generate 54.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. DSC Investment
Performance |
| Timeline |
| SBI Investment KOREA |
| DSC Investment |
SBI Investment and DSC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and DSC Investment
The main advantage of trading using opposite SBI Investment and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, DSC Investment 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 DSC Investment will offset losses from the drop in DSC Investment's long position.| SBI Investment vs. SK Chemicals Co | SBI Investment vs. Korea Investment Holdings | SBI Investment vs. Daejung Chemicals Metals | SBI Investment vs. Seoam Machinery Industry |
| DSC Investment vs. Daejoo Electronic Materials | DSC Investment vs. Sungho Electronics Corp | DSC Investment vs. Korean Reinsurance Co | DSC Investment vs. Seoul Electronics Telecom |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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