Correlation Between Dongbu Steel and Playgram
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Playgram 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 Playgram 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 Playgram Co, you can compare the effects of market volatilities on Dongbu Steel and Playgram 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 Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Playgram.
Diversification Opportunities for Dongbu Steel and Playgram
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and Playgram is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram 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 Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Playgram go up and down completely randomly.
Pair Corralation between Dongbu Steel and Playgram
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 0.67 times more return on investment than Playgram. However, Dongbu Steel Co is 1.5 times less risky than Playgram. It trades about 0.0 of its potential returns per unit of risk. Playgram Co is currently generating about -0.02 per unit of risk. If you would invest 798,745 in Dongbu Steel Co on September 3, 2024 and sell it today you would lose (136,745) from holding Dongbu Steel Co or give up 17.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. Playgram Co
Performance |
| Timeline |
| Dongbu Steel |
| Playgram |
Dongbu Steel and Playgram Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Playgram
The main advantage of trading using opposite Dongbu Steel and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Playgram 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 Playgram will offset losses from the drop in Playgram's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
| Playgram vs. LG Chemicals | Playgram vs. POSCO Holdings | Playgram vs. Hanwha Solutions | Playgram 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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