Correlation Between Dong-A Steel and Daejoo
Can any of the company-specific risk be diversified away by investing in both Dong-A Steel and Daejoo 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 Dong-A Steel and Daejoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Daejoo Inc, you can compare the effects of market volatilities on Dong-A Steel and Daejoo 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 Dong-A Steel with a short position of Daejoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong-A Steel and Daejoo.
Diversification Opportunities for Dong-A Steel and Daejoo
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dong-A and Daejoo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Daejoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Inc and Dong-A 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 Dong A Steel Technology are associated (or correlated) with Daejoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Inc has no effect on the direction of Dong-A Steel i.e., Dong-A Steel and Daejoo go up and down completely randomly.
Pair Corralation between Dong-A Steel and Daejoo
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Daejoo. In addition to that, Dong-A Steel is 2.15 times more volatile than Daejoo Inc. It trades about -0.13 of its total potential returns per unit of risk. Daejoo Inc is currently generating about 0.24 per unit of volatility. If you would invest 130,500 in Daejoo Inc on September 14, 2024 and sell it today you would earn a total of 14,100 from holding Daejoo Inc or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dong A Steel Technology vs. Daejoo Inc
Performance |
| Timeline |
| Dong A Steel |
| Daejoo Inc |
Dong-A Steel and Daejoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong-A Steel and Daejoo
The main advantage of trading using opposite Dong-A Steel and Daejoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong-A Steel position performs unexpectedly, Daejoo 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 Daejoo will offset losses from the drop in Daejoo's long position.| Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. SK Hynix | Dong-A Steel vs. POSCO Holdings |
| Daejoo vs. HB Technology TD | Daejoo vs. People Technology | Daejoo vs. CKH Food Health | Daejoo vs. Dong A Steel Technology |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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