Correlation Between Moonbae Steel and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Korea 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 Moonbae Steel and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moonbae Steel and Korea Steel Co, you can compare the effects of market volatilities on Moonbae Steel and Korea 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 Moonbae Steel with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Korea Steel.
Diversification Opportunities for Moonbae Steel and Korea Steel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Moonbae and Korea is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and Moonbae 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 Moonbae Steel are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Korea Steel go up and down completely randomly.
Pair Corralation between Moonbae Steel and Korea Steel
Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the Korea Steel. In addition to that, Moonbae Steel is 1.26 times more volatile than Korea Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Korea Steel Co is currently generating about -0.03 per unit of volatility. If you would invest 221,000 in Korea Steel Co on November 9, 2024 and sell it today you would lose (56,300) from holding Korea Steel Co or give up 25.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. Korea Steel Co
Performance |
| Timeline |
| Moonbae Steel |
| Korea Steel |
Moonbae Steel and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and Korea Steel
The main advantage of trading using opposite Moonbae Steel and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Korea 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| Moonbae Steel vs. INNOX Advanced Materials | Moonbae Steel vs. RF Materials Co | Moonbae Steel vs. Hyundai Engineering Plastics | Moonbae Steel vs. Samsung Publishing Co |
| Korea Steel vs. Daejoo Electronic Materials | Korea Steel vs. Korea Electronic Certification | Korea Steel vs. InnoTherapy | Korea Steel vs. Anam Electronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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