Correlation Between Dongbu Steel and Korea Information
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Korea Information 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 Korea Information 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 Korea Information Communications, you can compare the effects of market volatilities on Dongbu Steel and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Korea Information.
Diversification Opportunities for Dongbu Steel and Korea Information
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongbu and Korea is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Korea Information go up and down completely randomly.
Pair Corralation between Dongbu Steel and Korea Information
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the Korea Information. In addition to that, Dongbu Steel is 3.23 times more volatile than Korea Information Communications. It trades about -0.04 of its total potential returns per unit of risk. Korea Information Communications is currently generating about -0.11 per unit of volatility. If you would invest 826,000 in Korea Information Communications on September 3, 2024 and sell it today you would lose (14,000) from holding Korea Information Communications or give up 1.69% 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. Korea Information Communicatio
Performance |
| Timeline |
| Dongbu Steel |
| Korea Information |
Dongbu Steel and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Korea Information
The main advantage of trading using opposite Dongbu Steel and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
| Korea Information vs. Cloud Air CoLtd | Korea Information vs. Genie Music | Korea Information vs. Samlip General Foods | Korea Information vs. Organic Special Pet |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |