Correlation Between DRB Industrial and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both DRB Industrial and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on DRB Industrial and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRB Industrial and KakaoBank Corp.
Diversification Opportunities for DRB Industrial and KakaoBank Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DRB and KakaoBank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding DRB Industrial Co and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of DRB Industrial i.e., DRB Industrial and KakaoBank Corp go up and down completely randomly.
Pair Corralation between DRB Industrial and KakaoBank Corp
Assuming the 90 days trading horizon DRB Industrial Co is expected to generate 1.04 times more return on investment than KakaoBank Corp. However, DRB Industrial is 1.04 times more volatile than KakaoBank Corp. It trades about 0.47 of its potential returns per unit of risk. KakaoBank Corp is currently generating about -0.17 per unit of risk. If you would invest 672,000 in DRB Industrial Co on October 28, 2024 and sell it today you would earn a total of 88,000 from holding DRB Industrial Co or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRB Industrial Co vs. KakaoBank Corp
Performance |
| Timeline |
| DRB Industrial |
| KakaoBank Corp |
DRB Industrial and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRB Industrial and KakaoBank Corp
The main advantage of trading using opposite DRB Industrial and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRB Industrial position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| DRB Industrial vs. KB Financial Group | DRB Industrial vs. Shinhan Financial Group | DRB Industrial vs. Hana Financial | DRB Industrial vs. Woori Financial Group |
| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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