Correlation Between Moonbae Steel and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Daehan 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 Daehan 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 Daehan Steel, you can compare the effects of market volatilities on Moonbae Steel and Daehan 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Daehan Steel.
Diversification Opportunities for Moonbae Steel and Daehan Steel
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Moonbae and Daehan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Daehan Steel go up and down completely randomly.
Pair Corralation between Moonbae Steel and Daehan Steel
Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the Daehan Steel. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.01 times less risky than Daehan Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Daehan Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,370,345 in Daehan Steel on November 9, 2024 and sell it today you would earn a total of 190,655 from holding Daehan Steel or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. Daehan Steel
Performance |
| Timeline |
| Moonbae Steel |
| Daehan Steel |
Moonbae Steel and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and Daehan Steel
The main advantage of trading using opposite Moonbae Steel and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan 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 |
| Daehan Steel vs. Dongil Metal Co | Daehan Steel vs. Seoyon Topmetal Co | Daehan Steel vs. Lee Ku Industrial | Daehan Steel vs. Daejung Chemicals Metals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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