Correlation Between Dongkuk Steel and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both Dongkuk Steel and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on Dongkuk Steel and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Steel and Sambo Corrugated.
Diversification Opportunities for Dongkuk Steel and Sambo Corrugated
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongkuk and Sambo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Steel Mill and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of Dongkuk Steel i.e., Dongkuk Steel and Sambo Corrugated go up and down completely randomly.
Pair Corralation between Dongkuk Steel and Sambo Corrugated
Assuming the 90 days trading horizon Dongkuk Steel Mill is expected to generate 1.21 times more return on investment than Sambo Corrugated. However, Dongkuk Steel is 1.21 times more volatile than Sambo Corrugated Board. It trades about -0.09 of its potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.14 per unit of risk. If you would invest 777,000 in Dongkuk Steel Mill on September 5, 2024 and sell it today you would lose (41,000) from holding Dongkuk Steel Mill or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Steel Mill vs. Sambo Corrugated Board
Performance |
| Timeline |
| Dongkuk Steel Mill |
| Sambo Corrugated Board |
Dongkuk Steel and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Steel and Sambo Corrugated
The main advantage of trading using opposite Dongkuk Steel and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Steel position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| Dongkuk Steel vs. Miwon Chemicals Co | Dongkuk Steel vs. Iljin Materials Co | Dongkuk Steel vs. Kukdong Oil Chemicals | Dongkuk Steel vs. Seoul Semiconductor Co |
| Sambo Corrugated vs. Hanil Iron Steel | Sambo Corrugated vs. Pungguk Ethanol Industrial | Sambo Corrugated vs. Dongbu Steel Co | Sambo Corrugated vs. Aprogen Healthcare Games |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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