Correlation Between TAEYANG and DB Financial
Can any of the company-specific risk be diversified away by investing in both TAEYANG 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 TAEYANG and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAEYANG and DB Financial Investment, you can compare the effects of market volatilities on TAEYANG 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 TAEYANG with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAEYANG and DB Financial.
Diversification Opportunities for TAEYANG and DB Financial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TAEYANG and 016610 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TAEYANG 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 TAEYANG 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 TAEYANG 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 TAEYANG i.e., TAEYANG and DB Financial go up and down completely randomly.
Pair Corralation between TAEYANG and DB Financial
Assuming the 90 days trading horizon TAEYANG is expected to generate 1.11 times less return on investment than DB Financial. But when comparing it to its historical volatility, TAEYANG is 1.34 times less risky than DB Financial. It trades about 0.11 of its potential returns per unit of risk. DB Financial Investment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 508,000 in DB Financial Investment on September 21, 2024 and sell it today you would earn a total of 19,000 from holding DB Financial Investment or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAEYANG vs. DB Financial Investment
Performance |
| Timeline |
| TAEYANG |
| DB Financial Investment |
TAEYANG and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAEYANG and DB Financial
The main advantage of trading using opposite TAEYANG and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAEYANG 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.| TAEYANG vs. Lotte Energy Materials | TAEYANG vs. LAKE MATERIALS LTD | TAEYANG vs. Daejung Chemicals Metals | TAEYANG vs. PI Advanced Materials |
| DB Financial vs. Inzi Display CoLtd | DB Financial vs. Lotte Data Communication | DB Financial vs. Sangsin Energy Display | DB Financial vs. Korea Steel 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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