Correlation Between Kiwoom and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Kiwoom and Dongbu 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 Kiwoom and Dongbu Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kiwoom and Dongbu Steel Co, you can compare the effects of market volatilities on Kiwoom and Dongbu 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 Kiwoom with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kiwoom and Dongbu Steel.
Diversification Opportunities for Kiwoom and Dongbu Steel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kiwoom and Dongbu is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kiwoom and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel and Kiwoom 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 Kiwoom are associated (or correlated) with Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Kiwoom i.e., Kiwoom and Dongbu Steel go up and down completely randomly.
Pair Corralation between Kiwoom and Dongbu Steel
Assuming the 90 days trading horizon Kiwoom is expected to under-perform the Dongbu Steel. But the stock apears to be less risky and, when comparing its historical volatility, Kiwoom is 1.02 times less risky than Dongbu Steel. The stock trades about -0.09 of its potential returns per unit of risk. The Dongbu Steel Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 630,000 in Dongbu Steel Co on September 13, 2024 and sell it today you would lose (32,000) from holding Dongbu Steel Co or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kiwoom vs. Dongbu Steel Co
Performance |
| Timeline |
| Kiwoom |
| Dongbu Steel |
Kiwoom and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kiwoom and Dongbu Steel
The main advantage of trading using opposite Kiwoom and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kiwoom position performs unexpectedly, Dongbu 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| Kiwoom vs. Taegu Broadcasting | Kiwoom vs. Samlip General Foods | Kiwoom vs. Sempio Foods Co | Kiwoom vs. Sungwoo Electronics Co |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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