Correlation Between Korea Information and Dongkuk Steel
Can any of the company-specific risk be diversified away by investing in both Korea 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 Korea 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 Korea Information Engineering and Dongkuk Steel Mill, you can compare the effects of market volatilities on Korea 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 Korea Information with a short position of Dongkuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Dongkuk Steel.
Diversification Opportunities for Korea Information and Dongkuk Steel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Dongkuk is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering 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 Korea 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 Korea Information Engineering 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 Korea Information i.e., Korea Information and Dongkuk Steel go up and down completely randomly.
Pair Corralation between Korea Information and Dongkuk Steel
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 1.09 times more return on investment than Dongkuk Steel. However, Korea Information is 1.09 times more volatile than Dongkuk Steel Mill. It trades about -0.01 of its potential returns per unit of risk. Dongkuk Steel Mill is currently generating about -0.06 per unit of risk. If you would invest 336,000 in Korea Information Engineering on September 12, 2024 and sell it today you would lose (69,000) from holding Korea Information Engineering or give up 20.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Dongkuk Steel Mill
Performance |
| Timeline |
| Korea Information |
| Dongkuk Steel Mill |
Korea Information and Dongkuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Dongkuk Steel
The main advantage of trading using opposite Korea Information and Dongkuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea 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.| Korea Information vs. Cube Entertainment | Korea Information vs. Dreamus Company | Korea Information vs. LG Energy Solution | Korea Information vs. Dongwon System |
| Dongkuk Steel vs. Insung Information Co | Dongkuk Steel vs. Ssangyong Information Communication | Dongkuk Steel vs. Korea Information Engineering | Dongkuk Steel vs. DONGKUK TED METAL |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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