Correlation Between Home Center and DB Financial
Can any of the company-specific risk be diversified away by investing in both Home Center 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 Home Center and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Center Holdings and DB Financial Investment, you can compare the effects of market volatilities on Home Center 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 Home Center with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Center and DB Financial.
Diversification Opportunities for Home Center and DB Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and 016610 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Home Center Holdings 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 Home Center 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 Home Center Holdings 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 Home Center i.e., Home Center and DB Financial go up and down completely randomly.
Pair Corralation between Home Center and DB Financial
Assuming the 90 days trading horizon Home Center Holdings is expected to under-perform the DB Financial. In addition to that, Home Center is 1.01 times more volatile than DB Financial Investment. It trades about -0.07 of its total potential returns per unit of risk. DB Financial Investment is currently generating about 0.04 per unit of volatility. If you would invest 407,722 in DB Financial Investment on August 31, 2024 and sell it today you would earn a total of 108,278 from holding DB Financial Investment or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Center Holdings vs. DB Financial Investment
Performance |
| Timeline |
| Home Center Holdings |
| DB Financial Investment |
Home Center and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Center and DB Financial
The main advantage of trading using opposite Home Center and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Center 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.| Home Center vs. LG Chemicals | Home Center vs. POSCO Holdings | Home Center vs. Hanwha Solutions | Home Center vs. Lotte Chemical Corp |
| DB Financial vs. TOPMATERIAL LTD | DB Financial vs. Union Materials Corp | DB Financial vs. SCI Information Service | DB Financial vs. National Plastic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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