Correlation Between Daedong Steel and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Daedong Steel and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Daedong Steel and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and TOPMATERIAL.
Diversification Opportunities for Daedong Steel and TOPMATERIAL
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daedong and TOPMATERIAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Daedong Steel i.e., Daedong Steel and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Daedong Steel and TOPMATERIAL
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 0.68 times more return on investment than TOPMATERIAL. However, Daedong Steel Co is 1.46 times less risky than TOPMATERIAL. It trades about -0.11 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.2 per unit of risk. If you would invest 400,000 in Daedong Steel Co on September 2, 2024 and sell it today you would lose (52,500) from holding Daedong Steel Co or give up 13.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. TOPMATERIAL LTD
Performance |
| Timeline |
| Daedong Steel |
| TOPMATERIAL LTD |
Daedong Steel and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and TOPMATERIAL
The main advantage of trading using opposite Daedong Steel and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's 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 |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |