Correlation Between SK Chemicals and DB Insurance
Can any of the company-specific risk be diversified away by investing in both SK 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 SK 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 SK Chemicals Co and DB Insurance Co, you can compare the effects of market volatilities on SK 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 SK Chemicals with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and DB Insurance.
Diversification Opportunities for SK Chemicals and DB Insurance
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 28513K and 005830 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and SK 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 SK Chemicals Co 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 SK Chemicals i.e., SK Chemicals and DB Insurance go up and down completely randomly.
Pair Corralation between SK Chemicals and DB Insurance
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 1.22 times more return on investment than DB Insurance. However, SK Chemicals is 1.22 times more volatile than DB Insurance Co. It trades about 0.13 of its potential returns per unit of risk. DB Insurance Co is currently generating about -0.06 per unit of risk. If you would invest 1,888,000 in SK Chemicals Co on October 11, 2024 and sell it today you would earn a total of 112,000 from holding SK Chemicals Co or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. DB Insurance Co
Performance |
| Timeline |
| SK Chemicals |
| DB Insurance |
SK Chemicals and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and DB Insurance
The main advantage of trading using opposite SK Chemicals and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK 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.| SK Chemicals vs. Sung Bo Chemicals | SK Chemicals vs. Jeju Beer Co | SK Chemicals vs. Hankook Furniture Co | SK Chemicals vs. Asiana Airlines |
| DB Insurance vs. SK Chemicals Co | DB Insurance vs. Eugene Technology CoLtd | DB Insurance vs. Neungyule Education | DB Insurance vs. Hannong Chemicals |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |