Correlation Between Moonbae Steel and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel 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 Moonbae Steel and Daedong 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 Daedong Steel Co, you can compare the effects of market volatilities on Moonbae Steel 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 Moonbae Steel with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Daedong Steel.
Diversification Opportunities for Moonbae Steel and Daedong Steel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Moonbae and Daedong is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong 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 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 Moonbae Steel i.e., Moonbae Steel and Daedong Steel go up and down completely randomly.
Pair Corralation between Moonbae Steel and Daedong Steel
Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.85 times more return on investment than Daedong Steel. However, Moonbae Steel is 1.85 times more volatile than Daedong Steel Co. It trades about 0.29 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.12 per unit of risk. If you would invest 219,500 in Moonbae Steel on December 4, 2024 and sell it today you would earn a total of 29,500 from holding Moonbae Steel or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. Daedong Steel Co
Performance |
| Timeline |
| Moonbae Steel |
| Daedong Steel |
Moonbae Steel and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and Daedong Steel
The main advantage of trading using opposite Moonbae Steel and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel 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.| Moonbae Steel vs. InnoTherapy | Moonbae Steel vs. Wave Electronics Co | Moonbae Steel vs. Sungmoon Electronics Co | Moonbae Steel vs. Daejoo Electronic Materials |
| Daedong Steel vs. Formetal Co | Daedong Steel vs. Hanjoo Light Metal | Daedong Steel vs. Sangshin Electronics Co | Daedong Steel vs. Samsung 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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