Correlation Between Daiyang Metal and Dong Il
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Dong Il 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 Daiyang Metal and Dong Il into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and Dong Il Steel, you can compare the effects of market volatilities on Daiyang Metal and Dong Il 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 Daiyang Metal with a short position of Dong Il. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Dong Il.
Diversification Opportunities for Daiyang Metal and Dong Il
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daiyang and Dong is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Dong Il Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Il Steel and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with Dong Il. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Il Steel has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Dong Il go up and down completely randomly.
Pair Corralation between Daiyang Metal and Dong Il
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 2.78 times more return on investment than Dong Il. However, Daiyang Metal is 2.78 times more volatile than Dong Il Steel. It trades about 0.0 of its potential returns per unit of risk. Dong Il Steel is currently generating about -0.05 per unit of risk. If you would invest 315,500 in Daiyang Metal Co on September 12, 2024 and sell it today you would lose (156,000) from holding Daiyang Metal Co or give up 49.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.96% |
| Values | Daily Returns |
Daiyang Metal Co vs. Dong Il Steel
Performance |
| Timeline |
| Daiyang Metal |
| Dong Il Steel |
Daiyang Metal and Dong Il Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Dong Il
The main advantage of trading using opposite Daiyang Metal and Dong Il positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Dong Il 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 Dong Il will offset losses from the drop in Dong Il's long position.| Daiyang Metal vs. Samsung Electronics Co | Daiyang Metal vs. Samsung Electronics Co | Daiyang Metal vs. SK Hynix | Daiyang Metal vs. POSCO Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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