Correlation Between Dongbu Steel and EBEST Investment
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and EBEST Investment 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 EBEST Investment 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 EBEST Investment Securities, you can compare the effects of market volatilities on Dongbu Steel and EBEST Investment 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 EBEST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and EBEST Investment.
Diversification Opportunities for Dongbu Steel and EBEST Investment
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbu and EBEST is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec 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 EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and EBEST Investment go up and down completely randomly.
Pair Corralation between Dongbu Steel and EBEST Investment
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the EBEST Investment. But the stock apears to be less risky and, when comparing its historical volatility, Dongbu Steel Co is 1.18 times less risky than EBEST Investment. The stock trades about -0.03 of its potential returns per unit of risk. The EBEST Investment Securities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 379,802 in EBEST Investment Securities on September 1, 2024 and sell it today you would earn a total of 15,698 from holding EBEST Investment Securities or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. EBEST Investment Securities
Performance |
| Timeline |
| Dongbu Steel |
| EBEST Investment Sec |
Dongbu Steel and EBEST Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and EBEST Investment
The main advantage of trading using opposite Dongbu Steel and EBEST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, EBEST Investment 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 EBEST Investment will offset losses from the drop in EBEST Investment's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Hyundai Steel |
| EBEST Investment vs. DB Financial Investment | EBEST Investment vs. Lindeman Asia Investment | EBEST Investment vs. BGF Retail Co | EBEST Investment vs. Jin Air 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |