Correlation Between DB Insurance and Industrial Bank

Can any of the company-specific risk be diversified away by investing in both DB Insurance and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on DB Insurance and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and Industrial Bank.

Diversification Opportunities for DB Insurance and Industrial Bank

0.0

Correlation Coefficient

DB Insurance  Industrial Bank

Pay attention - limited upside

The 3 months correlation between 005830 and Industrial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of DB Insurance i.e., DB Insurance and Industrial Bank go up and down completely randomly.

Pair Corralation between DB Insurance and Industrial Bank

Assuming the 90 days trading horizon DB Insurance Co is expected to generate 1.97 times more return on investment than Industrial Bank. However, DB Insurance is 1.97 times more volatile than Industrial Bank. It trades about 0.05 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.07 per unit of risk. If you would invest  6,490,545  in DB Insurance Co on October 11, 2024 and sell it today you would earn a total of  3,569,455  from holding DB Insurance Co or generate 54.99% return on investment over 90 days.

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

DB Insurance Co  vs.  Industrial Bank

DB Insurance

Risk-Adjusted Performance

0 of 100

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.

Industrial Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DB Insurance and Industrial Bank

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

The idea behind DB Insurance Co and Industrial Bank 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.