Correlation Between Dongbu Steel and Hanil Iron
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Hanil Iron 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 Dongbu Steel and Hanil Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbu Steel Co and Hanil Iron Steel, you can compare the effects of market volatilities on Dongbu Steel and Hanil Iron 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 Dongbu Steel with a short position of Hanil Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Hanil Iron.
Diversification Opportunities for Dongbu Steel and Hanil Iron
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongbu and Hanil is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and Dongbu 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 Dongbu Steel Co are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Hanil Iron go up and down completely randomly.
Pair Corralation between Dongbu Steel and Hanil Iron
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the Hanil Iron. In addition to that, Dongbu Steel is 1.24 times more volatile than Hanil Iron Steel. It trades about -0.02 of its total potential returns per unit of risk. Hanil Iron Steel is currently generating about 0.05 per unit of volatility. If you would invest 199,900 in Hanil Iron Steel on August 29, 2024 and sell it today you would earn a total of 3,600 from holding Hanil Iron Steel or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. Hanil Iron Steel
Performance |
| Timeline |
| Dongbu Steel |
| Hanil Iron Steel |
Dongbu Steel and Hanil Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Hanil Iron
The main advantage of trading using opposite Dongbu Steel and Hanil Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Hanil Iron 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 Hanil Iron will offset losses from the drop in Hanil Iron's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. Lotte Chemical Corp | Dongbu Steel vs. Hyundai Steel | Dongbu Steel vs. Seah Steel Corp |
| Hanil Iron vs. LS Materials | Hanil Iron vs. Hyosung Advanced Materials | Hanil Iron vs. NH Investment Securities | Hanil Iron vs. PI Advanced Materials |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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