Correlation Between Daedong Steel and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Daedong Steel 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 Daedong Steel and Dongbu Steel 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 Dongbu Steel Co, you can compare the effects of market volatilities on Daedong Steel 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 Daedong Steel with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and Dongbu Steel.
Diversification Opportunities for Daedong Steel and Dongbu Steel
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daedong and Dongbu is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel 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 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 Daedong Steel i.e., Daedong Steel and Dongbu Steel go up and down completely randomly.
Pair Corralation between Daedong Steel and Dongbu Steel
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 1.15 times more return on investment than Dongbu Steel. However, Daedong Steel is 1.15 times more volatile than Dongbu Steel Co. It trades about -0.01 of its potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.05 per unit of risk. If you would invest 339,000 in Daedong Steel Co on September 14, 2024 and sell it today you would lose (7,000) from holding Daedong Steel Co or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. Dongbu Steel Co
Performance |
| Timeline |
| Daedong Steel |
| Dongbu Steel |
Daedong Steel and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and Dongbu Steel
The main advantage of trading using opposite Daedong Steel and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel 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.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Samhyun Steel Co | Daedong Steel vs. Gyeongnam Steel Co | Daedong Steel vs. Jeil Steel Mfg |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |