Correlation Between Digital Power and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Digital Power and DB Insurance 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 Digital Power and DB Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Power Communications and DB Insurance Co, you can compare the effects of market volatilities on Digital Power and DB Insurance 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 Digital Power with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and DB Insurance.
Diversification Opportunities for Digital Power and DB Insurance
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and 005830 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and Digital Power 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 Digital Power Communications are associated (or correlated) with DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of Digital Power i.e., Digital Power and DB Insurance go up and down completely randomly.
Pair Corralation between Digital Power and DB Insurance
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 0.83 times more return on investment than DB Insurance. However, Digital Power Communications is 1.21 times less risky than DB Insurance. It trades about -0.02 of its potential returns per unit of risk. DB Insurance Co is currently generating about -0.1 per unit of risk. If you would invest 863,112 in Digital Power Communications on November 2, 2024 and sell it today you would lose (45,112) from holding Digital Power Communications or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. DB Insurance Co
Performance |
| Timeline |
| Digital Power Commun |
| DB Insurance |
Digital Power and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and DB Insurance
The main advantage of trading using opposite Digital Power and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, DB Insurance 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 Insurance will offset losses from the drop in DB Insurance's long position.| Digital Power vs. Inzi Display CoLtd | Digital Power vs. Tuksu Engineering ConstructionLtd | Digital Power vs. Korea Computer | Digital Power vs. LG Display Co |
| DB Insurance vs. Atinum Investment Co | DB Insurance vs. Hanjin Transportation Co | DB Insurance vs. Korea Investment Holdings | DB Insurance vs. SK Chemicals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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