Correlation Between Ni Steel and DONGKUK STEEL
Can any of the company-specific risk be diversified away by investing in both Ni Steel and DONGKUK 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 Ni Steel and DONGKUK STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ni Steel and DONGKUK STEEL MILL, you can compare the effects of market volatilities on Ni Steel and DONGKUK 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 Ni Steel with a short position of DONGKUK STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ni Steel and DONGKUK STEEL.
Diversification Opportunities for Ni Steel and DONGKUK STEEL
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 008260 and DONGKUK is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ni Steel and DONGKUK STEEL MILL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK STEEL MILL and Ni 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 Ni Steel are associated (or correlated) with DONGKUK STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK STEEL MILL has no effect on the direction of Ni Steel i.e., Ni Steel and DONGKUK STEEL go up and down completely randomly.
Pair Corralation between Ni Steel and DONGKUK STEEL
Assuming the 90 days trading horizon Ni Steel is expected to under-perform the DONGKUK STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Ni Steel is 1.67 times less risky than DONGKUK STEEL. The stock trades about -0.06 of its potential returns per unit of risk. The DONGKUK STEEL MILL is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,484,000 in DONGKUK STEEL MILL on August 29, 2024 and sell it today you would lose (644,000) from holding DONGKUK STEEL MILL or give up 43.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.91% |
| Values | Daily Returns |
Ni Steel vs. DONGKUK STEEL MILL
Performance |
| Timeline |
| Ni Steel |
| DONGKUK STEEL MILL |
Ni Steel and DONGKUK STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ni Steel and DONGKUK STEEL
The main advantage of trading using opposite Ni Steel and DONGKUK STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ni Steel position performs unexpectedly, DONGKUK 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 DONGKUK STEEL will offset losses from the drop in DONGKUK STEEL's long position.| Ni Steel vs. Jeju Air Co | Ni Steel vs. Daejoo Electronic Materials | Ni Steel vs. TOPMATERIAL LTD | Ni Steel vs. LAKE MATERIALS LTD |
| DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. LG Energy Solution | DONGKUK STEEL vs. SK Hynix |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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