Correlation Between Insung Information and Dongkuk Steel
Can any of the company-specific risk be diversified away by investing in both Insung Information and Dongkuk 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 Insung Information and Dongkuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Dongkuk Steel Mill, you can compare the effects of market volatilities on Insung Information and Dongkuk 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 Insung Information with a short position of Dongkuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Dongkuk Steel.
Diversification Opportunities for Insung Information and Dongkuk Steel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and Dongkuk is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Dongkuk Steel Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Steel Mill and Insung Information 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 Insung Information Co are associated (or correlated) with Dongkuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Steel Mill has no effect on the direction of Insung Information i.e., Insung Information and Dongkuk Steel go up and down completely randomly.
Pair Corralation between Insung Information and Dongkuk Steel
Assuming the 90 days trading horizon Insung Information Co is expected to generate 2.69 times more return on investment than Dongkuk Steel. However, Insung Information is 2.69 times more volatile than Dongkuk Steel Mill. It trades about 0.03 of its potential returns per unit of risk. Dongkuk Steel Mill is currently generating about -0.07 per unit of risk. If you would invest 185,500 in Insung Information Co on September 13, 2024 and sell it today you would earn a total of 1,400 from holding Insung Information Co or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Dongkuk Steel Mill
Performance |
| Timeline |
| Insung Information |
| Dongkuk Steel Mill |
Insung Information and Dongkuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Dongkuk Steel
The main advantage of trading using opposite Insung Information and Dongkuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Dongkuk 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 Dongkuk Steel will offset losses from the drop in Dongkuk Steel's long position.| Insung Information vs. Daejung Chemicals Metals | Insung Information vs. FNC Entertainment Co | Insung Information vs. DONGKUK TED METAL | Insung Information vs. Dongil Metal Co |
| Dongkuk Steel vs. LG Chemicals | Dongkuk Steel vs. POSCO Holdings | Dongkuk Steel vs. Hanwha Solutions | Dongkuk Steel vs. Lotte Chemical Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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