Correlation Between Daiyang Metal and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal 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 Daiyang Metal and Daedong Steel 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 Daedong Steel Co, you can compare the effects of market volatilities on Daiyang Metal 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 Daiyang Metal with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Daedong Steel.
Diversification Opportunities for Daiyang Metal and Daedong Steel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daiyang and Daedong is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong 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 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 Daiyang Metal i.e., Daiyang Metal and Daedong Steel go up and down completely randomly.
Pair Corralation between Daiyang Metal and Daedong Steel
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 1.56 times more return on investment than Daedong Steel. However, Daiyang Metal is 1.56 times more volatile than Daedong Steel Co. It trades about 0.02 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.07 per unit of risk. If you would invest 165,800 in Daiyang Metal Co on September 21, 2024 and sell it today you would lose (500.00) from holding Daiyang Metal Co or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Daedong Steel Co
Performance |
| Timeline |
| Daiyang Metal |
| Daedong Steel |
Daiyang Metal and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Daedong Steel
The main advantage of trading using opposite Daiyang Metal and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal 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.| Daiyang Metal vs. Samsung Electronics Co | Daiyang Metal vs. Samsung Electronics Co | Daiyang Metal vs. SK Hynix | Daiyang Metal vs. POSCO Holdings |
| Daedong Steel vs. CU Tech Corp | Daedong Steel vs. Wonbang Tech Co | Daedong Steel vs. DONGKUK TED METAL | Daedong Steel vs. Daiyang Metal 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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