Correlation Between LB Investment and DB Financial
Can any of the company-specific risk be diversified away by investing in both LB Investment and DB Financial 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 LB Investment and DB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and DB Financial Investment, you can compare the effects of market volatilities on LB Investment and DB Financial 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 LB Investment with a short position of DB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and DB Financial.
Diversification Opportunities for LB Investment and DB Financial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between 309960 and 016610 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment and LB Investment 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 LB Investment are associated (or correlated) with DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of LB Investment i.e., LB Investment and DB Financial go up and down completely randomly.
Pair Corralation between LB Investment and DB Financial
Assuming the 90 days trading horizon LB Investment is expected to under-perform the DB Financial. In addition to that, LB Investment is 2.06 times more volatile than DB Financial Investment. It trades about -0.05 of its total potential returns per unit of risk. DB Financial Investment is currently generating about 0.04 per unit of volatility. If you would invest 404,380 in DB Financial Investment on November 7, 2024 and sell it today you would earn a total of 134,620 from holding DB Financial Investment or generate 33.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.14% |
| Values | Daily Returns |
LB Investment vs. DB Financial Investment
Performance |
| Timeline |
| LB Investment |
| DB Financial Investment |
LB Investment and DB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and DB Financial
The main advantage of trading using opposite LB Investment and DB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, DB Financial 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 Financial will offset losses from the drop in DB Financial's long position.| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
| DB Financial vs. SV Investment | DB Financial vs. Pureun Mutual Savings | DB Financial vs. Korea Investment Holdings | DB Financial vs. Korea Information Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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