Correlation Between Dongkuk Steel and LockLock
Can any of the company-specific risk be diversified away by investing in both Dongkuk Steel and LockLock 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 LockLock 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 LockLock Co, you can compare the effects of market volatilities on Dongkuk Steel and LockLock 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 LockLock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Steel and LockLock.
Diversification Opportunities for Dongkuk Steel and LockLock
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongkuk and LockLock is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Steel Mill and LockLock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LockLock 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 LockLock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LockLock has no effect on the direction of Dongkuk Steel i.e., Dongkuk Steel and LockLock go up and down completely randomly.
Pair Corralation between Dongkuk Steel and LockLock
Assuming the 90 days trading horizon Dongkuk Steel Mill is expected to under-perform the LockLock. In addition to that, Dongkuk Steel is 6.35 times more volatile than LockLock Co. It trades about -0.06 of its total potential returns per unit of risk. LockLock Co is currently generating about -0.04 per unit of volatility. If you would invest 870,000 in LockLock Co on September 12, 2024 and sell it today you would lose (4,000) from holding LockLock Co or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Dongkuk Steel Mill vs. LockLock Co
Performance |
| Timeline |
| Dongkuk Steel Mill |
| LockLock |
Dongkuk Steel and LockLock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Steel and LockLock
The main advantage of trading using opposite Dongkuk Steel and LockLock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Steel position performs unexpectedly, LockLock 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 LockLock will offset losses from the drop in LockLock's long position.| Dongkuk Steel vs. LG Chemicals | Dongkuk Steel vs. POSCO Holdings | Dongkuk Steel vs. Hanwha Solutions | Dongkuk Steel vs. Lotte Chemical Corp |
| LockLock vs. LG Chemicals | LockLock vs. POSCO Holdings | LockLock vs. Hanwha Solutions | LockLock vs. Lotte Chemical Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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