Correlation Between DRB Industrial and Hana Materials
Can any of the company-specific risk be diversified away by investing in both DRB Industrial and Hana Materials 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 Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on DRB Industrial and Hana Materials 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRB Industrial and Hana Materials.
Diversification Opportunities for DRB Industrial and Hana Materials
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DRB and Hana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DRB Industrial Co and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of DRB Industrial i.e., DRB Industrial and Hana Materials go up and down completely randomly.
Pair Corralation between DRB Industrial and Hana Materials
Assuming the 90 days trading horizon DRB Industrial Co is expected to generate 0.57 times more return on investment than Hana Materials. However, DRB Industrial Co is 1.77 times less risky than Hana Materials. It trades about -0.06 of its potential returns per unit of risk. Hana Materials is currently generating about -0.06 per unit of risk. If you would invest 711,000 in DRB Industrial Co on November 7, 2024 and sell it today you would lose (17,000) from holding DRB Industrial Co or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
DRB Industrial Co vs. Hana Materials
Performance |
| Timeline |
| DRB Industrial |
| Hana Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DRB Industrial and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRB Industrial and Hana Materials
The main advantage of trading using opposite DRB Industrial and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRB Industrial position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| DRB Industrial vs. Daewoo SBI SPAC | DRB Industrial vs. Jahwa Electron | DRB Industrial vs. Wonbang Tech Co |
| Hana Materials vs. Eagle Veterinary Technology | Hana Materials vs. Yura Tech Co | Hana Materials vs. Bosung Power Technology | Hana Materials vs. Wonbang Tech 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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