Correlation Between Dgb Financial and Korean Reinsurance

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dgb Financial and Korean Reinsurance 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 Dgb Financial and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dgb Financial and Korean Reinsurance Co, you can compare the effects of market volatilities on Dgb Financial and Korean Reinsurance 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 Dgb Financial with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dgb Financial and Korean Reinsurance.

Diversification Opportunities for Dgb Financial and Korean Reinsurance

DgbKoreanDiversified AwayDgbKoreanDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Dgb and Korean is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dgb Financial and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Dgb Financial 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 Dgb Financial are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Dgb Financial i.e., Dgb Financial and Korean Reinsurance go up and down completely randomly.

Pair Corralation between Dgb Financial and Korean Reinsurance

Assuming the 90 days trading horizon Dgb Financial is expected to generate 2.55 times less return on investment than Korean Reinsurance. But when comparing it to its historical volatility, Dgb Financial is 1.15 times less risky than Korean Reinsurance. It trades about 0.07 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  706,666  in Korean Reinsurance Co on September 15, 2024 and sell it today you would earn a total of  104,334  from holding Korean Reinsurance Co or generate 14.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Dgb Financial  vs.  Korean Reinsurance Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -5051015
JavaScript chart by amCharts 3.21.15139130 003690
       Timeline  
Dgb Financial 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dgb Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dgb Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8,0008,2008,4008,6008,8009,0009,2009,400
Korean Reinsurance 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Korean Reinsurance Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korean Reinsurance sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7,0007,5008,0008,500

Dgb Financial and Korean Reinsurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.23-3.17-2.11-1.040.01841.12.23.34.41 0.050.100.150.20
JavaScript chart by amCharts 3.21.15139130 003690
       Returns  

Pair Trading with Dgb Financial and Korean Reinsurance

The main advantage of trading using opposite Dgb Financial and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dgb Financial position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.
The idea behind Dgb Financial and Korean Reinsurance 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.
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 Correlations module to find global opportunities by holding instruments from different markets.

Other Complementary Tools

Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets