Correlation Between Songwon Industrial and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Daedong 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 Songwon Industrial and Daedong Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Daedong Steel Co, you can compare the effects of market volatilities on Songwon Industrial and Daedong 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 Songwon Industrial with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Daedong Steel.
Diversification Opportunities for Songwon Industrial and Daedong Steel
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Songwon and Daedong is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Steel and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Daedong Steel go up and down completely randomly.
Pair Corralation between Songwon Industrial and Daedong Steel
Assuming the 90 days trading horizon Songwon Industrial Co is expected to under-perform the Daedong Steel. In addition to that, Songwon Industrial is 1.25 times more volatile than Daedong Steel Co. It trades about -0.31 of its total potential returns per unit of risk. Daedong Steel Co is currently generating about -0.1 per unit of volatility. If you would invest 373,000 in Daedong Steel Co on August 29, 2024 and sell it today you would lose (21,000) from holding Daedong Steel Co or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Daedong Steel Co
Performance |
| Timeline |
| Songwon Industrial |
| Daedong Steel |
Songwon Industrial and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Daedong Steel
The main advantage of trading using opposite Songwon Industrial and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Daedong 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.| Songwon Industrial vs. AptaBio Therapeutics | Songwon Industrial vs. Daewoo SBI SPAC | Songwon Industrial vs. Dream Security co | Songwon Industrial vs. Microfriend |
| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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