Correlation Between Global Standard and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Global Standard and Daedong 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 Global Standard and Daedong Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and Daedong Steel Co, you can compare the effects of market volatilities on Global Standard and Daedong 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 Global Standard with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and Daedong Steel.
Diversification Opportunities for Global Standard and Daedong Steel
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Daedong is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Steel and Global Standard 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 Global Standard Technology are associated (or correlated) with Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of Global Standard i.e., Global Standard and Daedong Steel go up and down completely randomly.
Pair Corralation between Global Standard and Daedong Steel
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 1.45 times more return on investment than Daedong Steel. However, Global Standard is 1.45 times more volatile than Daedong Steel Co. It trades about 0.06 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.1 per unit of risk. If you would invest 1,526,000 in Global Standard Technology on August 29, 2024 and sell it today you would earn a total of 46,000 from holding Global Standard Technology or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. Daedong Steel Co
Performance |
| Timeline |
| Global Standard Tech |
| Daedong Steel |
Global Standard and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and Daedong Steel
The main advantage of trading using opposite Global Standard and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, Daedong 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.| Global Standard vs. Korea Real Estate | Global Standard vs. Korea Ratings Co | Global Standard vs. IQuest Co | Global Standard vs. Wonbang Tech Co |
| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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