Correlation Between Dongkuk Steel and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Dongkuk Steel and Daehan Steel 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 Daehan Steel 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 Daehan Steel, you can compare the effects of market volatilities on Dongkuk Steel and Daehan Steel 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Steel and Daehan Steel.
Diversification Opportunities for Dongkuk Steel and Daehan Steel
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongkuk and Daehan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Steel Mill and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Dongkuk Steel i.e., Dongkuk Steel and Daehan Steel go up and down completely randomly.
Pair Corralation between Dongkuk Steel and Daehan Steel
Assuming the 90 days trading horizon Dongkuk Steel Mill is expected to under-perform the Daehan Steel. In addition to that, Dongkuk Steel is 1.08 times more volatile than Daehan Steel. It trades about -0.02 of its total potential returns per unit of risk. Daehan Steel is currently generating about 0.04 per unit of volatility. If you would invest 1,348,000 in Daehan Steel on August 29, 2024 and sell it today you would earn a total of 179,000 from holding Daehan Steel or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Steel Mill vs. Daehan Steel
Performance |
| Timeline |
| Dongkuk Steel Mill |
| Daehan Steel |
Dongkuk Steel and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Steel and Daehan Steel
The main advantage of trading using opposite Dongkuk Steel and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Steel position performs unexpectedly, Daehan Steel 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 Daehan Steel will offset losses from the drop in Daehan Steel'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 |
| Daehan Steel vs. Cots Technology Co | Daehan Steel vs. Ssangyong Information Communication | Daehan Steel vs. Daesung Hi Tech Co | Daehan Steel vs. BIT Computer Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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