Correlation Between Dongbu Steel and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Dongbu Steel and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Sungchang Autotech.
Diversification Opportunities for Dongbu Steel and Sungchang Autotech
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbu and Sungchang is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Dongbu Steel and Sungchang Autotech
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 1.43 times more return on investment than Sungchang Autotech. However, Dongbu Steel is 1.43 times more volatile than Sungchang Autotech Co. It trades about -0.01 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.07 per unit of risk. If you would invest 847,647 in Dongbu Steel Co on November 19, 2024 and sell it today you would lose (248,647) from holding Dongbu Steel Co or give up 29.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. Sungchang Autotech Co
Performance |
| Timeline |
| Dongbu Steel |
| Sungchang Autotech |
Dongbu Steel and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Sungchang Autotech
The main advantage of trading using opposite Dongbu Steel and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Dongbu Steel vs. BIT Computer Co | Dongbu Steel vs. Korea Plasma Technology | Dongbu Steel vs. ENF Technology Co | Dongbu Steel vs. Hana Technology Co |
| Sungchang Autotech vs. Lotte Data Communication | Sungchang Autotech vs. Daishin Information Communications | Sungchang Autotech vs. Daiyang Metal Co | Sungchang Autotech vs. Digital Power Communications |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |