Correlation Between Daedong Metals and Kukil Metal
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Kukil Metal 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 Kukil Metal 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 Kukil Metal Co, you can compare the effects of market volatilities on Daedong Metals and Kukil Metal 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 Kukil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Kukil Metal.
Diversification Opportunities for Daedong Metals and Kukil Metal
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daedong and Kukil is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal 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 Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of Daedong Metals i.e., Daedong Metals and Kukil Metal go up and down completely randomly.
Pair Corralation between Daedong Metals and Kukil Metal
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 2.47 times more return on investment than Kukil Metal. However, Daedong Metals is 2.47 times more volatile than Kukil Metal Co. It trades about -0.01 of its potential returns per unit of risk. Kukil Metal Co is currently generating about -0.17 per unit of risk. If you would invest 834,000 in Daedong Metals Co on September 2, 2024 and sell it today you would lose (92,000) from holding Daedong Metals Co or give up 11.03% 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. Kukil Metal Co
Performance |
| Timeline |
| Daedong Metals |
| Kukil Metal |
Daedong Metals and Kukil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Kukil Metal
The main advantage of trading using opposite Daedong Metals and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Kukil Metal 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 Kukil Metal will offset losses from the drop in Kukil Metal's long position.The idea behind Daedong Metals Co and Kukil Metal Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kukil Metal vs. Keum Kang Steel | Kukil Metal vs. Tplex Co | Kukil Metal vs. Jeil Steel Mfg | Kukil Metal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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