Correlation Between Daedong Metals and Korea New
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Korea New 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 Daedong Metals and Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Metals Co and Korea New Network, you can compare the effects of market volatilities on Daedong Metals and Korea New 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 Daedong Metals with a short position of Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Korea New.
Diversification Opportunities for Daedong Metals and Korea New
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daedong and Korea is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network and Daedong Metals 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 Daedong Metals Co are associated (or correlated) with Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Daedong Metals i.e., Daedong Metals and Korea New go up and down completely randomly.
Pair Corralation between Daedong Metals and Korea New
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 2.19 times more return on investment than Korea New. However, Daedong Metals is 2.19 times more volatile than Korea New Network. It trades about 0.01 of its potential returns per unit of risk. Korea New Network is currently generating about -0.05 per unit of risk. If you would invest 828,372 in Daedong Metals Co on August 27, 2024 and sell it today you would lose (89,372) from holding Daedong Metals Co or give up 10.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Metals Co vs. Korea New Network
Performance |
| Timeline |
| Daedong Metals |
| Korea New Network |
Daedong Metals and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Korea New
The main advantage of trading using opposite Daedong Metals and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Korea New 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 New will offset losses from the drop in Korea New's long position.| Daedong Metals vs. Korea Investment Holdings | Daedong Metals vs. MediaZen | Daedong Metals vs. Coloray International Investment | Daedong Metals vs. Daewon Media Co |
| Korea New vs. Korean Air Lines | Korea New vs. Hanjoo Light Metal | Korea New vs. Jeju Air Co | Korea New vs. Daedong Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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