Correlation Between Korea Steel and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Daechang 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 Korea Steel and Daechang Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and Daechang Steel Co, you can compare the effects of market volatilities on Korea Steel and Daechang 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 Korea Steel with a short position of Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Daechang Steel.
Diversification Opportunities for Korea Steel and Daechang Steel
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Daechang is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang Steel and Korea 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 Korea Steel Co are associated (or correlated) with Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of Korea Steel i.e., Korea Steel and Daechang Steel go up and down completely randomly.
Pair Corralation between Korea Steel and Daechang Steel
Assuming the 90 days trading horizon Korea Steel Co is expected to under-perform the Daechang Steel. But the stock apears to be less risky and, when comparing its historical volatility, Korea Steel Co is 1.45 times less risky than Daechang Steel. The stock trades about -0.19 of its potential returns per unit of risk. The Daechang Steel Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 203,500 in Daechang Steel Co on November 5, 2024 and sell it today you would earn a total of 1,500 from holding Daechang Steel Co or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. Daechang Steel Co
Performance |
| Timeline |
| Korea Steel |
| Daechang Steel |
Korea Steel and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and Daechang Steel
The main advantage of trading using opposite Korea Steel and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Daechang 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| Korea Steel vs. Kaonmedia Co | Korea Steel vs. Pyung Hwa Industrial | Korea Steel vs. Eagon Industrial Co | Korea Steel vs. JYP Entertainment Corp |
| Daechang Steel vs. Pureun Mutual Savings | Daechang Steel vs. Dgb Financial | Daechang Steel vs. Shinhan Financial Group | Daechang Steel vs. Ecoplastic |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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