Correlation Between J Steel and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both J Steel and Daedong 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 Daedong 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 Daedong Steel Co, you can compare the effects of market volatilities on J Steel and Daedong 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 Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Daedong Steel.
Diversification Opportunities for J Steel and Daedong Steel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 023440 and Daedong is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong 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 Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of J Steel i.e., J Steel and Daedong Steel go up and down completely randomly.
Pair Corralation between J Steel and Daedong Steel
Assuming the 90 days trading horizon J Steel Co is expected to generate 2.31 times more return on investment than Daedong Steel. However, J Steel is 2.31 times more volatile than Daedong Steel Co. It trades about 0.15 of its potential returns per unit of risk. Daedong Steel Co is currently generating about 0.04 per unit of risk. If you would invest 151,700 in J Steel Co on November 29, 2024 and sell it today you would earn a total of 12,200 from holding J Steel Co or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. Daedong Steel Co
Performance |
| Timeline |
| J Steel |
| Daedong Steel |
J Steel and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and Daedong Steel
The main advantage of trading using opposite J Steel and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel position performs unexpectedly, Daedong 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.| J Steel vs. Bookook Steel | J Steel vs. Dongkuk Steel Mill | J Steel vs. Hwangkum Steel Technology | J Steel vs. Daehan Steel |
| Daedong Steel vs. MetaLabs Co | Daedong Steel vs. KPX Green Chemical | Daedong Steel vs. Youngbo Chemical Co | Daedong Steel vs. Daejung Chemicals Metals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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