Correlation Between Sungchang Autotech and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Sungchang Autotech 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 Sungchang Autotech and Dongbu Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungchang Autotech Co and Dongbu Steel Co, you can compare the effects of market volatilities on Sungchang Autotech 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 Sungchang Autotech with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungchang Autotech and Dongbu Steel.
Diversification Opportunities for Sungchang Autotech and Dongbu Steel
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sungchang and Dongbu is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech i.e., Sungchang Autotech and Dongbu Steel go up and down completely randomly.
Pair Corralation between Sungchang Autotech and Dongbu Steel
Assuming the 90 days trading horizon Sungchang Autotech Co is expected to under-perform the Dongbu Steel. In addition to that, Sungchang Autotech is 1.2 times more volatile than Dongbu Steel Co. It trades about -0.17 of its total potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.05 per unit of volatility. If you would invest 683,000 in Dongbu Steel Co on September 1, 2024 and sell it today you would lose (21,000) from holding Dongbu Steel Co or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungchang Autotech Co vs. Dongbu Steel Co
Performance |
| Timeline |
| Sungchang Autotech |
| Dongbu Steel |
Sungchang Autotech and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungchang Autotech and Dongbu Steel
The main advantage of trading using opposite Sungchang Autotech and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungchang Autotech 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.| Sungchang Autotech vs. Konan Technology | Sungchang Autotech vs. Korea Shipbuilding Offshore | Sungchang Autotech vs. Nasmedia Co | Sungchang Autotech vs. JYP Entertainment Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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