Correlation Between Dongwon Metal and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Dongwon Metal and Korea Steel 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 Dongwon Metal and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon Metal Co and Korea Steel Co, you can compare the effects of market volatilities on Dongwon Metal and Korea Steel 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 Dongwon Metal with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Metal and Korea Steel.
Diversification Opportunities for Dongwon Metal and Korea Steel
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongwon and Korea is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Metal Co and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel and Dongwon Metal 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 Dongwon Metal Co are associated (or correlated) with Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Dongwon Metal i.e., Dongwon Metal and Korea Steel go up and down completely randomly.
Pair Corralation between Dongwon Metal and Korea Steel
Assuming the 90 days trading horizon Dongwon Metal Co is expected to under-perform the Korea Steel. But the stock apears to be less risky and, when comparing its historical volatility, Dongwon Metal Co is 1.08 times less risky than Korea Steel. The stock trades about -0.25 of its potential returns per unit of risk. The Korea Steel Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 149,800 in Korea Steel Co on September 3, 2024 and sell it today you would lose (9,000) from holding Korea Steel Co or give up 6.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon Metal Co vs. Korea Steel Co
Performance |
| Timeline |
| Dongwon Metal |
| Korea Steel |
Dongwon Metal and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon Metal and Korea Steel
The main advantage of trading using opposite Dongwon Metal and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Metal position performs unexpectedly, Korea Steel 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| Dongwon Metal vs. HB Technology TD | Dongwon Metal vs. Hwangkum Steel Technology | Dongwon Metal vs. JYP Entertainment Corp | Dongwon Metal vs. TJ media Co |
| Korea Steel vs. Top Material Co | Korea Steel vs. PI Advanced Materials | Korea Steel vs. Hanjin Transportation Co | Korea Steel vs. Hanmi Semiconductor 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |