Correlation Between Dongbu Steel and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Woori Technology 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 Woori Technology 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 Woori Technology Investment, you can compare the effects of market volatilities on Dongbu Steel and Woori Technology 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 Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Woori Technology.
Diversification Opportunities for Dongbu Steel and Woori Technology
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongbu and Woori is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Woori Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology Inv 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 Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology Inv has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Woori Technology go up and down completely randomly.
Pair Corralation between Dongbu Steel and Woori Technology
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 0.73 times more return on investment than Woori Technology. However, Dongbu Steel Co is 1.38 times less risky than Woori Technology. It trades about -0.06 of its potential returns per unit of risk. Woori Technology Investment is currently generating about -0.31 per unit of risk. If you would invest 630,000 in Dongbu Steel Co on September 13, 2024 and sell it today you would lose (32,000) from holding Dongbu Steel Co or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. Woori Technology Investment
Performance |
| Timeline |
| Dongbu Steel |
| Woori Technology Inv |
Dongbu Steel and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Woori Technology
The main advantage of trading using opposite Dongbu Steel and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
| Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group | Woori Technology vs. Hana Financial | Woori Technology vs. Woori Financial Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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