Correlation Between Hana Materials and DRB Industrial
Can any of the company-specific risk be diversified away by investing in both Hana Materials and DRB Industrial 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 Hana Materials and DRB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and DRB Industrial Co, you can compare the effects of market volatilities on Hana Materials and DRB Industrial 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 Hana Materials with a short position of DRB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and DRB Industrial.
Diversification Opportunities for Hana Materials and DRB Industrial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hana and DRB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and DRB Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRB Industrial and Hana Materials 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 Hana Materials are associated (or correlated) with DRB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRB Industrial has no effect on the direction of Hana Materials i.e., Hana Materials and DRB Industrial go up and down completely randomly.
Pair Corralation between Hana Materials and DRB Industrial
Assuming the 90 days trading horizon Hana Materials is expected to under-perform the DRB Industrial. In addition to that, Hana Materials is 1.77 times more volatile than DRB Industrial Co. It trades about -0.06 of its total potential returns per unit of risk. DRB Industrial Co is currently generating about -0.06 per unit of volatility. 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 |
Hana Materials vs. DRB Industrial Co
Performance |
| Timeline |
| Hana Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DRB Industrial |
Hana Materials and DRB Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and DRB Industrial
The main advantage of trading using opposite Hana Materials and DRB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, DRB Industrial 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 DRB Industrial will offset losses from the drop in DRB Industrial's long position.| Hana Materials vs. Eagle Veterinary Technology | Hana Materials vs. Yura Tech Co | Hana Materials vs. Bosung Power Technology | Hana Materials vs. Wonbang Tech Co |
| DRB Industrial vs. Daewoo SBI SPAC | DRB Industrial vs. Jahwa Electron | DRB Industrial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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