Correlation Between Dongkuk Steel and SAMRYOONG CoLtd
Can any of the company-specific risk be diversified away by investing in both Dongkuk Steel and SAMRYOONG CoLtd 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 Dongkuk Steel and SAMRYOONG CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongkuk Steel Mill and SAMRYOONG CoLtd, you can compare the effects of market volatilities on Dongkuk Steel and SAMRYOONG CoLtd 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 Dongkuk Steel with a short position of SAMRYOONG CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Steel and SAMRYOONG CoLtd.
Diversification Opportunities for Dongkuk Steel and SAMRYOONG CoLtd
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongkuk and SAMRYOONG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Steel Mill and SAMRYOONG CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMRYOONG CoLtd and Dongkuk Steel 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 Dongkuk Steel Mill are associated (or correlated) with SAMRYOONG CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMRYOONG CoLtd has no effect on the direction of Dongkuk Steel i.e., Dongkuk Steel and SAMRYOONG CoLtd go up and down completely randomly.
Pair Corralation between Dongkuk Steel and SAMRYOONG CoLtd
Assuming the 90 days trading horizon Dongkuk Steel Mill is expected to generate 0.82 times more return on investment than SAMRYOONG CoLtd. However, Dongkuk Steel Mill is 1.22 times less risky than SAMRYOONG CoLtd. It trades about -0.11 of its potential returns per unit of risk. SAMRYOONG CoLtd is currently generating about -0.11 per unit of risk. If you would invest 800,000 in Dongkuk Steel Mill on August 29, 2024 and sell it today you would lose (51,000) from holding Dongkuk Steel Mill or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Steel Mill vs. SAMRYOONG CoLtd
Performance |
| Timeline |
| Dongkuk Steel Mill |
| SAMRYOONG CoLtd |
Dongkuk Steel and SAMRYOONG CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Steel and SAMRYOONG CoLtd
The main advantage of trading using opposite Dongkuk Steel and SAMRYOONG CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Steel position performs unexpectedly, SAMRYOONG CoLtd 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 SAMRYOONG CoLtd will offset losses from the drop in SAMRYOONG CoLtd's long position.| Dongkuk Steel vs. Jeju Beer Co | Dongkuk Steel vs. Sungdo Engineering Construction | Dongkuk Steel vs. Seohee Construction Co | Dongkuk Steel vs. Samick Musical Instruments |
| SAMRYOONG CoLtd vs. Korea Air Svc | SAMRYOONG CoLtd vs. Jeju Air Co | SAMRYOONG CoLtd vs. Total Soft Bank | SAMRYOONG CoLtd vs. Dgb Financial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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