Correlation Between DRB Industrial and Korea Air
Can any of the company-specific risk be diversified away by investing in both DRB Industrial and Korea Air 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 DRB Industrial and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRB Industrial Co and Korea Air Svc, you can compare the effects of market volatilities on DRB Industrial and Korea Air 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 DRB Industrial with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRB Industrial and Korea Air.
Diversification Opportunities for DRB Industrial and Korea Air
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DRB and Korea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DRB Industrial Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and DRB Industrial 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 DRB Industrial Co are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of DRB Industrial i.e., DRB Industrial and Korea Air go up and down completely randomly.
Pair Corralation between DRB Industrial and Korea Air
Assuming the 90 days trading horizon DRB Industrial Co is expected to generate 0.79 times more return on investment than Korea Air. However, DRB Industrial Co is 1.26 times less risky than Korea Air. It trades about 0.21 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.09 per unit of risk. If you would invest 675,978 in DRB Industrial Co on October 13, 2024 and sell it today you would earn a total of 52,022 from holding DRB Industrial Co or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRB Industrial Co vs. Korea Air Svc
Performance |
| Timeline |
| DRB Industrial |
| Korea Air Svc |
DRB Industrial and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRB Industrial and Korea Air
The main advantage of trading using opposite DRB Industrial and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRB Industrial position performs unexpectedly, Korea Air 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 Korea Air will offset losses from the drop in Korea Air's long position.| DRB Industrial vs. CU Tech Corp | DRB Industrial vs. Mobileleader CoLtd | DRB Industrial vs. FNSTech Co | DRB Industrial vs. SS TECH |
| Korea Air vs. DRB Industrial Co | Korea Air vs. Jin Air Co | Korea Air vs. Mgame Corp | Korea Air vs. Kakao Games Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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