Correlation Between Wonil Special and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Wonil Special 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 Wonil Special and Daedong Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Daedong Steel Co, you can compare the effects of market volatilities on Wonil Special 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 Wonil Special with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Daedong Steel.
Diversification Opportunities for Wonil Special and Daedong Steel
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wonil and Daedong is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special 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 Wonil Special 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 Wonil Special 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 Wonil Special i.e., Wonil Special and Daedong Steel go up and down completely randomly.
Pair Corralation between Wonil Special and Daedong Steel
Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.52 times more return on investment than Daedong Steel. However, Wonil Special Steel is 1.91 times less risky than Daedong Steel. It trades about 0.02 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.1 per unit of risk. If you would invest 711,000 in Wonil Special Steel on August 29, 2024 and sell it today you would earn a total of 3,000 from holding Wonil Special Steel or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Daedong Steel Co
Performance |
| Timeline |
| Wonil Special Steel |
| Daedong Steel |
Wonil Special and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Daedong Steel
The main advantage of trading using opposite Wonil Special and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special 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.| Wonil Special vs. LG Chemicals | Wonil Special vs. Lotte Chemical Corp | Wonil Special vs. Hyundai Steel | Wonil Special vs. Seah Steel Corp |
| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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