Correlation Between Daehan Steel and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Moonbae 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 Daehan Steel and Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Moonbae Steel, you can compare the effects of market volatilities on Daehan Steel and Moonbae 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 Daehan Steel with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Moonbae Steel.
Diversification Opportunities for Daehan Steel and Moonbae Steel
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daehan and Moonbae is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and Daehan 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 Daehan Steel are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Daehan Steel i.e., Daehan Steel and Moonbae Steel go up and down completely randomly.
Pair Corralation between Daehan Steel and Moonbae Steel
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.99 times more return on investment than Moonbae Steel. However, Daehan Steel is 1.01 times less risky than Moonbae Steel. It trades about -0.16 of its potential returns per unit of risk. Moonbae Steel is currently generating about -0.18 per unit of risk. If you would invest 1,619,000 in Daehan Steel on November 9, 2024 and sell it today you would lose (58,000) from holding Daehan Steel or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Moonbae Steel
Performance |
| Timeline |
| Daehan Steel |
| Moonbae Steel |
Daehan Steel and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Moonbae Steel
The main advantage of trading using opposite Daehan Steel and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| Daehan Steel vs. Dongil Metal Co | Daehan Steel vs. Seoyon Topmetal Co | Daehan Steel vs. Lee Ku Industrial | Daehan Steel vs. Daejung Chemicals Metals |
| Moonbae Steel vs. INNOX Advanced Materials | Moonbae Steel vs. RF Materials Co | Moonbae Steel vs. Hyundai Engineering Plastics | Moonbae Steel vs. Samsung Publishing 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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