Correlation Between DB Insurance and Young Poong

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

Diversification Opportunities for DB Insurance and Young Poong

0.73

Correlation Coefficient

DB Insurance  Young Poong

Poor diversification

The 3 months correlation between 005830 and Young is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and Young Poong Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Poong Precision 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 Young Poong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Poong Precision has no effect on the direction of DB Insurance i.e., DB Insurance and Young Poong go up and down completely randomly.

Pair Corralation between DB Insurance and Young Poong

Assuming the 90 days trading horizon DB Insurance is expected to generate 1.11 times less return on investment than Young Poong. But when comparing it to its historical volatility, DB Insurance Co is 1.8 times less risky than Young Poong. It trades about 0.05 of its potential returns per unit of risk. Young Poong Precision is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,043,043  in Young Poong Precision on October 10, 2024 and sell it today you would earn a total of  229,957  from holding Young Poong Precision or generate 22.05% return on investment over 90 days.

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

DB Insurance Co  vs.  Young Poong Precision

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.

Young Poong Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Young Poong Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DB Insurance and Young Poong

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

The idea behind DB Insurance Co and Young Poong Precision 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.