Correlation Between Daedong Steel and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Daedong Steel and Songwon Industrial 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 Daedong Steel and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Steel Co and Songwon Industrial Co, you can compare the effects of market volatilities on Daedong Steel and Songwon Industrial 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 Daedong Steel with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and Songwon Industrial.
Diversification Opportunities for Daedong Steel and Songwon Industrial
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daedong and Songwon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Daedong 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 Daedong Steel Co are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Daedong Steel i.e., Daedong Steel and Songwon Industrial go up and down completely randomly.
Pair Corralation between Daedong Steel and Songwon Industrial
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 1.28 times more return on investment than Songwon Industrial. However, Daedong Steel is 1.28 times more volatile than Songwon Industrial Co. It trades about 0.0 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 411,139 in Daedong Steel Co on August 29, 2024 and sell it today you would lose (59,139) from holding Daedong Steel Co or give up 14.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. Songwon Industrial Co
Performance |
| Timeline |
| Daedong Steel |
| Songwon Industrial |
Daedong Steel and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and Songwon Industrial
The main advantage of trading using opposite Daedong Steel and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel Co |
| Songwon Industrial vs. AptaBio Therapeutics | Songwon Industrial vs. Daewoo SBI SPAC | Songwon Industrial vs. Dream Security co | Songwon Industrial vs. Microfriend |
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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