Correlation Between Daejung Chemicals and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and DB Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and DB Insurance Co, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and DB Insurance.
Diversification Opportunities for Daejung Chemicals and DB Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and 005830 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and DB Insurance go up and down completely randomly.
Pair Corralation between Daejung Chemicals and DB Insurance
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the DB Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.48 times less risky than DB Insurance. The stock trades about -0.22 of its potential returns per unit of risk. The DB Insurance Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 11,100,000 in DB Insurance Co on August 31, 2024 and sell it today you would lose (260,000) from holding DB Insurance Co or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. DB Insurance Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| DB Insurance |
Daejung Chemicals and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and DB Insurance
The main advantage of trading using opposite Daejung Chemicals and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
| DB Insurance vs. Koryo Credit Information | DB Insurance vs. Moadata Co | DB Insurance vs. SV Investment | DB Insurance vs. Golden Bridge Investment |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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