Correlation Between DB Insurance and Hotel Shilla

Can any of the company-specific risk be diversified away by investing in both DB Insurance and Hotel Shilla 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 DB Insurance and Hotel Shilla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DB Insurance Co and Hotel Shilla Co, you can compare the effects of market volatilities on DB Insurance and Hotel Shilla 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 DB Insurance with a short position of Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and Hotel Shilla.

Diversification Opportunities for DB Insurance and Hotel Shilla

-0.29

Correlation Coefficient

DB Insurance  Hotel Shilla

Very good diversification

The 3 months correlation between 005830 and Hotel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla and DB Insurance 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 DB Insurance Co are associated (or correlated) with Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of DB Insurance i.e., DB Insurance and Hotel Shilla go up and down completely randomly.

Pair Corralation between DB Insurance and Hotel Shilla

Assuming the 90 days trading horizon DB Insurance Co is expected to under-perform the Hotel Shilla. In addition to that, DB Insurance is 1.2 times more volatile than Hotel Shilla Co. It trades about -0.05 of its total potential returns per unit of risk. Hotel Shilla Co is currently generating about 0.12 per unit of volatility. If you would invest  3,055,000  in Hotel Shilla Co on December 25, 2024 and sell it today you would earn a total of  350,000  from holding Hotel Shilla Co or generate 11.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DB Insurance Co  vs.  Hotel Shilla Co

DB Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days DB Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hotel Shilla

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Shilla Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hotel Shilla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DB Insurance and Hotel Shilla

The main advantage of trading using opposite DB Insurance and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.

The idea behind DB Insurance Co and Hotel Shilla Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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..