Correlation Between Han Kook and DB Financial
Can any of the company-specific risk be diversified away by investing in both Han Kook and DB Financial 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 Han Kook and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and DB Financial Investment, you can compare the effects of market volatilities on Han Kook and DB Financial 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 Han Kook with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and DB Financial.
Diversification Opportunities for Han Kook and DB Financial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Han and 016610 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment and Han Kook 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 Han Kook Steel are associated (or correlated) with DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of Han Kook i.e., Han Kook and DB Financial go up and down completely randomly.
Pair Corralation between Han Kook and DB Financial
Assuming the 90 days trading horizon Han Kook Steel is expected to generate 2.0 times more return on investment than DB Financial. However, Han Kook is 2.0 times more volatile than DB Financial Investment. It trades about 0.05 of its potential returns per unit of risk. DB Financial Investment is currently generating about 0.04 per unit of risk. If you would invest 188,000 in Han Kook Steel on October 11, 2024 and sell it today you would earn a total of 4,500 from holding Han Kook Steel or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Han Kook Steel vs. DB Financial Investment
Performance |
| Timeline |
| Han Kook Steel |
| DB Financial Investment |
Han Kook and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and DB Financial
The main advantage of trading using opposite Han Kook and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook position performs unexpectedly, DB Financial 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 DB Financial will offset losses from the drop in DB Financial's long position.| Han Kook vs. LG Display Co | Han Kook vs. LG Household Healthcare | Han Kook vs. Innowireless Co | Han Kook vs. Lotte Data Communication |
| DB Financial vs. Koryo Credit Information | DB Financial vs. DataSolution | DB Financial vs. Kakao Games Corp | DB Financial vs. Woorim Machinery 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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