Correlation Between Dongbu Steel and LockLock
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and LockLock 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 LockLock 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 LockLock Co, you can compare the effects of market volatilities on Dongbu Steel and LockLock 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 LockLock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and LockLock.
Diversification Opportunities for Dongbu Steel and LockLock
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongbu and LockLock is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and LockLock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LockLock 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 LockLock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LockLock has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and LockLock go up and down completely randomly.
Pair Corralation between Dongbu Steel and LockLock
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the LockLock. In addition to that, Dongbu Steel is 40.11 times more volatile than LockLock Co. It trades about -0.05 of its total potential returns per unit of risk. LockLock Co is currently generating about -0.07 per unit of volatility. If you would invest 867,000 in LockLock Co on September 14, 2024 and sell it today you would lose (1,000.00) from holding LockLock Co or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dongbu Steel Co vs. LockLock Co
Performance |
| Timeline |
| Dongbu Steel |
| LockLock |
Dongbu Steel and LockLock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and LockLock
The main advantage of trading using opposite Dongbu Steel and LockLock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, LockLock 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 LockLock will offset losses from the drop in LockLock's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
| LockLock vs. Dongbu Steel Co | LockLock vs. LG Display Co | LockLock vs. Moonbae Steel | LockLock vs. Wonil Special Steel |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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