Correlation Between Dong A and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Dong A and Daehan 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 Dong A and Daehan Steel 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 Daehan Steel, you can compare the effects of market volatilities on Dong A and Daehan 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 Dong A with a short position of Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Daehan Steel.
Diversification Opportunities for Dong A and Daehan Steel
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dong and Daehan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel and Dong A 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Dong A i.e., Dong A and Daehan Steel go up and down completely randomly.
Pair Corralation between Dong A and Daehan Steel
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 1.53 times more return on investment than Daehan Steel. However, Dong A is 1.53 times more volatile than Daehan Steel. It trades about 0.14 of its potential returns per unit of risk. Daehan Steel is currently generating about 0.19 per unit of risk. If you would invest 314,500 in Dong A Steel Technology on August 25, 2024 and sell it today you would earn a total of 38,000 from holding Dong A Steel Technology or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Daehan Steel
Performance |
| Timeline |
| Dong A Steel |
| Daehan Steel |
Dong A and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Daehan Steel
The main advantage of trading using opposite Dong A and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
| Daehan Steel vs. Sungchang Autotech Co | Daehan Steel vs. Nh Investment And | Daehan Steel vs. Lion Chemtech Co | Daehan Steel vs. EBEST Investment Securities |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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