Correlation Between Korea Real and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Korea Real and DB Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and DB Insurance Co, you can compare the effects of market volatilities on Korea Real 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 Korea Real with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and DB Insurance.
Diversification Opportunities for Korea Real and DB Insurance
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and 005830 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and Korea Real 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 Korea Real Estate 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 Korea Real i.e., Korea Real and DB Insurance go up and down completely randomly.
Pair Corralation between Korea Real and DB Insurance
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.26 times more return on investment than DB Insurance. However, Korea Real Estate is 3.8 times less risky than DB Insurance. It trades about 0.22 of its potential returns per unit of risk. DB Insurance Co is currently generating about -0.03 per unit of risk. If you would invest 100,400 in Korea Real Estate on September 18, 2024 and sell it today you would earn a total of 3,700 from holding Korea Real Estate or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. DB Insurance Co
Performance |
| Timeline |
| Korea Real Estate |
| DB Insurance |
Korea Real and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and DB Insurance
The main advantage of trading using opposite Korea Real and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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.| Korea Real vs. Formetal Co | Korea Real vs. KG Eco Technology | Korea Real vs. Puloon Technology | Korea Real vs. Konan Technology |
| DB Insurance vs. KB Financial Group | DB Insurance vs. Shinhan Financial Group | DB Insurance vs. Hana Financial | DB Insurance vs. Woori Financial Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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