Correlation Between Dongbu Steel and Kisan Telecom
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Kisan Telecom 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 Kisan Telecom 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 Kisan Telecom Co, you can compare the effects of market volatilities on Dongbu Steel and Kisan Telecom 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 Kisan Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Kisan Telecom.
Diversification Opportunities for Dongbu Steel and Kisan Telecom
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and Kisan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Kisan Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kisan Telecom 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 Kisan Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kisan Telecom has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Kisan Telecom go up and down completely randomly.
Pair Corralation between Dongbu Steel and Kisan Telecom
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 1.11 times more return on investment than Kisan Telecom. However, Dongbu Steel is 1.11 times more volatile than Kisan Telecom Co. It trades about 0.0 of its potential returns per unit of risk. Kisan Telecom Co is currently generating about -0.04 per unit of risk. If you would invest 793,950 in Dongbu Steel Co on September 2, 2024 and sell it today you would lose (131,950) from holding Dongbu Steel Co or give up 16.62% 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. Kisan Telecom Co
Performance |
| Timeline |
| Dongbu Steel |
| Kisan Telecom |
Dongbu Steel and Kisan Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Kisan Telecom
The main advantage of trading using opposite Dongbu Steel and Kisan Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Kisan Telecom 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 Kisan Telecom will offset losses from the drop in Kisan Telecom's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Hyundai Steel |
| Kisan Telecom vs. Dongsin Engineering Construction | Kisan Telecom vs. Doosan Fuel Cell | Kisan Telecom vs. Daishin Balance 1 | Kisan Telecom vs. Total Soft Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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