Correlation Between J Steel and Dongil Steel
Can any of the company-specific risk be diversified away by investing in both J Steel and Dongil 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 J Steel and Dongil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Steel Co and Dongil Steel Co, you can compare the effects of market volatilities on J Steel and Dongil 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 J Steel with a short position of Dongil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Dongil Steel.
Diversification Opportunities for J Steel and Dongil Steel
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between 023440 and Dongil is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Dongil Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Steel and J 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 J Steel Co are associated (or correlated) with Dongil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Steel has no effect on the direction of J Steel i.e., J Steel and Dongil Steel go up and down completely randomly.
Pair Corralation between J Steel and Dongil Steel
Assuming the 90 days trading horizon J Steel Co is expected to generate 4.7 times more return on investment than Dongil Steel. However, J Steel is 4.7 times more volatile than Dongil Steel Co. It trades about 0.11 of its potential returns per unit of risk. Dongil Steel Co is currently generating about -0.25 per unit of risk. If you would invest 169,600 in J Steel Co on August 29, 2024 and sell it today you would earn a total of 18,200 from holding J Steel Co or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. Dongil Steel Co
Performance |
| Timeline |
| J Steel |
| Dongil Steel |
J Steel and Dongil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and Dongil Steel
The main advantage of trading using opposite J Steel and Dongil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel position performs unexpectedly, Dongil 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 Dongil Steel will offset losses from the drop in Dongil Steel's long position.| J Steel vs. Shinsegae Information Communication | J Steel vs. Ssangyong Information Communication | J Steel vs. LG Display Co | J Steel vs. ZUM Internet Corp |
| Dongil Steel vs. Keum Kang Steel | Dongil Steel vs. Tplex Co | Dongil Steel vs. Samhyun Steel Co | Dongil Steel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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