Correlation Between Daekyung Machinery and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and Moonbae 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 Daekyung Machinery and Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daekyung Machinery Engineering and Moonbae Steel, you can compare the effects of market volatilities on Daekyung Machinery and Moonbae 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 Daekyung Machinery with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and Moonbae Steel.
Diversification Opportunities for Daekyung Machinery and Moonbae Steel
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daekyung and Moonbae is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and Daekyung Machinery 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 Daekyung Machinery Engineering are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and Moonbae Steel go up and down completely randomly.
Pair Corralation between Daekyung Machinery and Moonbae Steel
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to generate 0.82 times more return on investment than Moonbae Steel. However, Daekyung Machinery Engineering is 1.22 times less risky than Moonbae Steel. It trades about 0.04 of its potential returns per unit of risk. Moonbae Steel is currently generating about 0.02 per unit of risk. If you would invest 50,900 in Daekyung Machinery Engineering on September 12, 2024 and sell it today you would earn a total of 600.00 from holding Daekyung Machinery Engineering or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 56.52% |
| Values | Daily Returns |
Daekyung Machinery Engineering vs. Moonbae Steel
Performance |
| Timeline |
| Daekyung Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Moonbae Steel |
Daekyung Machinery and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daekyung Machinery and Moonbae Steel
The main advantage of trading using opposite Daekyung Machinery and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| Daekyung Machinery vs. Samsung Electronics Co | Daekyung Machinery vs. Samsung Electronics Co | Daekyung Machinery vs. SK Hynix | Daekyung Machinery vs. POSCO Holdings |
| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. POSCO Holdings | Moonbae Steel vs. Hanwha Solutions | Moonbae Steel vs. Lotte Chemical Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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