Correlation Between Dongbu Steel and UJU Electronics
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and UJU Electronics 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 UJU Electronics 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 UJU Electronics Co, you can compare the effects of market volatilities on Dongbu Steel and UJU Electronics 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 UJU Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and UJU Electronics.
Diversification Opportunities for Dongbu Steel and UJU Electronics
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbu and UJU is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics 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 UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and UJU Electronics go up and down completely randomly.
Pair Corralation between Dongbu Steel and UJU Electronics
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 0.89 times more return on investment than UJU Electronics. However, Dongbu Steel Co is 1.12 times less risky than UJU Electronics. It trades about 0.13 of its potential returns per unit of risk. UJU Electronics Co is currently generating about -0.11 per unit of risk. If you would invest 573,000 in Dongbu Steel Co on August 31, 2024 and sell it today you would earn a total of 95,000 from holding Dongbu Steel Co or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. UJU Electronics Co
Performance |
| Timeline |
| Dongbu Steel |
| UJU Electronics |
Dongbu Steel and UJU Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and UJU Electronics
The main advantage of trading using opposite Dongbu Steel and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.| Dongbu Steel vs. Samyoung Electronics Co | Dongbu Steel vs. Anam Electronics Co | Dongbu Steel vs. Jb Financial | Dongbu Steel vs. Daejoo Electronic Materials |
| UJU Electronics vs. DAEDUCK ELECTRONICS CoLtd | UJU Electronics vs. Daejung Chemicals Metals | UJU Electronics vs. Kukil Metal Co | UJU Electronics vs. Sungwoo Electronics Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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