Correlation Between NewFlex Technology and DB Financial
Can any of the company-specific risk be diversified away by investing in both NewFlex Technology 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 NewFlex Technology and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewFlex Technology Co and DB Financial Investment, you can compare the effects of market volatilities on NewFlex Technology 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 NewFlex Technology with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and DB Financial.
Diversification Opportunities for NewFlex Technology and DB Financial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NewFlex and 016610 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co 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 NewFlex Technology 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 NewFlex Technology Co 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 NewFlex Technology i.e., NewFlex Technology and DB Financial go up and down completely randomly.
Pair Corralation between NewFlex Technology and DB Financial
Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the DB Financial. In addition to that, NewFlex Technology is 1.75 times more volatile than DB Financial Investment. It trades about -0.26 of its total potential returns per unit of risk. DB Financial Investment is currently generating about -0.16 per unit of volatility. If you would invest 538,000 in DB Financial Investment on August 30, 2024 and sell it today you would lose (26,000) from holding DB Financial Investment or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewFlex Technology Co vs. DB Financial Investment
Performance |
| Timeline |
| NewFlex Technology |
| DB Financial Investment |
NewFlex Technology and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewFlex Technology and DB Financial
The main advantage of trading using opposite NewFlex Technology and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex Technology 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.| NewFlex Technology vs. Daou Data Corp | NewFlex Technology vs. Busan Industrial Co | NewFlex Technology vs. Busan Ind | NewFlex Technology vs. Shinhan WTI Futures |
| DB Financial vs. Hannong Chemicals | DB Financial vs. Tway Air Co | DB Financial vs. Haitai Confectionery Foods | DB Financial vs. Innowireless 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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