Correlation Between Samwon Steel and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Samwon Steel and Ni 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 Samwon Steel and Ni Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samwon Steel and Ni Steel, you can compare the effects of market volatilities on Samwon Steel and Ni 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 Samwon Steel with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samwon Steel and Ni Steel.
Diversification Opportunities for Samwon Steel and Ni Steel
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samwon and 008260 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Samwon Steel and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Samwon 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 Samwon Steel are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Samwon Steel i.e., Samwon Steel and Ni Steel go up and down completely randomly.
Pair Corralation between Samwon Steel and Ni Steel
Assuming the 90 days trading horizon Samwon Steel is expected to generate 8.8 times less return on investment than Ni Steel. But when comparing it to its historical volatility, Samwon Steel is 1.01 times less risky than Ni Steel. It trades about 0.01 of its potential returns per unit of risk. Ni Steel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 341,000 in Ni Steel on November 3, 2024 and sell it today you would earn a total of 11,500 from holding Ni Steel or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samwon Steel vs. Ni Steel
Performance |
| Timeline |
| Samwon Steel |
| Ni Steel |
Samwon Steel and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samwon Steel and Ni Steel
The main advantage of trading using opposite Samwon Steel and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samwon Steel position performs unexpectedly, Ni 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Samwon Steel vs. Hanjin Transportation Co | Samwon Steel vs. Dongwoo Farm To | Samwon Steel vs. DB Insurance Co | Samwon Steel vs. Tuksu Engineering ConstructionLtd |
| Ni Steel vs. V One Tech Co | Ni Steel vs. CG Hi Tech | Ni Steel vs. Green Cross Medical | Ni Steel vs. Dongwoon Anatech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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