Correlation Between Daedong Steel and Cuckoo Homesys
Can any of the company-specific risk be diversified away by investing in both Daedong Steel and Cuckoo Homesys 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 Cuckoo Homesys 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 Cuckoo Homesys Co, you can compare the effects of market volatilities on Daedong Steel and Cuckoo Homesys 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 Cuckoo Homesys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and Cuckoo Homesys.
Diversification Opportunities for Daedong Steel and Cuckoo Homesys
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daedong and Cuckoo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and Cuckoo Homesys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Homesys 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 Cuckoo Homesys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Homesys has no effect on the direction of Daedong Steel i.e., Daedong Steel and Cuckoo Homesys go up and down completely randomly.
Pair Corralation between Daedong Steel and Cuckoo Homesys
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 2.3 times more return on investment than Cuckoo Homesys. However, Daedong Steel is 2.3 times more volatile than Cuckoo Homesys Co. It trades about 0.02 of its potential returns per unit of risk. Cuckoo Homesys Co is currently generating about -0.01 per unit of risk. If you would invest 348,154 in Daedong Steel Co on September 2, 2024 and sell it today you would lose (654.00) from holding Daedong Steel Co or give up 0.19% 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. Cuckoo Homesys Co
Performance |
| Timeline |
| Daedong Steel |
| Cuckoo Homesys |
Daedong Steel and Cuckoo Homesys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and Cuckoo Homesys
The main advantage of trading using opposite Daedong Steel and Cuckoo Homesys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel position performs unexpectedly, Cuckoo Homesys 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 Cuckoo Homesys will offset losses from the drop in Cuckoo Homesys' long position.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. Jeil Steel Mfg | Daedong Steel vs. Wonil Special Steel |
| Cuckoo Homesys vs. Busan Industrial Co | Cuckoo Homesys vs. Busan Ind | Cuckoo Homesys vs. Mirae Asset Daewoo | Cuckoo Homesys vs. Finebesteel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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