Correlation Between Dongbu Steel and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Dongbu Steel and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and Alton Sports.
Diversification Opportunities for Dongbu Steel and Alton Sports
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbu and Alton is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports CoLtd 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and Alton Sports go up and down completely randomly.
Pair Corralation between Dongbu Steel and Alton Sports
Assuming the 90 days trading horizon Dongbu Steel Co is expected to generate 1.86 times more return on investment than Alton Sports. However, Dongbu Steel is 1.86 times more volatile than Alton Sports CoLtd. It trades about -0.02 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.26 per unit of risk. If you would invest 672,000 in Dongbu Steel Co on August 31, 2024 and sell it today you would lose (10,000) from holding Dongbu Steel Co or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. Alton Sports CoLtd
Performance |
| Timeline |
| Dongbu Steel |
| Alton Sports CoLtd |
Dongbu Steel and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and Alton Sports
The main advantage of trading using opposite Dongbu Steel and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' 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 |
| Alton Sports vs. LG Display | Alton Sports vs. Hyundai Motor | Alton Sports vs. Hyundai Motor Co | Alton Sports vs. Hyundai Motor 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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