Correlation Between Dongbu Steel and DSC Investment
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and DSC 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 DSC 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 DSC Investment, you can compare the effects of market volatilities on Dongbu Steel and DSC 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 DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and DSC Investment.
Diversification Opportunities for Dongbu Steel and DSC Investment
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbu and DSC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment 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 DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and DSC Investment go up and down completely randomly.
Pair Corralation between Dongbu Steel and DSC Investment
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the DSC Investment. In addition to that, Dongbu Steel is 1.1 times more volatile than DSC Investment. It trades about -0.06 of its total potential returns per unit of risk. DSC Investment is currently generating about 0.14 per unit of volatility. If you would invest 278,500 in DSC Investment on September 13, 2024 and sell it today you would earn a total of 23,500 from holding DSC Investment or generate 8.44% 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. DSC Investment
Performance |
| Timeline |
| Dongbu Steel |
| DSC Investment |
Dongbu Steel and DSC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and DSC Investment
The main advantage of trading using opposite Dongbu Steel and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, DSC 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 DSC Investment will offset losses from the drop in DSC Investment's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
| DSC Investment vs. Nh Investment And | DSC Investment vs. Hanwha InvestmentSecurities Co | DSC Investment vs. Solution Advanced Technology | DSC Investment vs. Busan Industrial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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