Correlation Between Daehan Steel and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Korea Shipbuilding 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 Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on Daehan Steel and Korea Shipbuilding 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 Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Korea Shipbuilding.
Diversification Opportunities for Daehan Steel and Korea Shipbuilding
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daehan and Korea is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding 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 Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of Daehan Steel i.e., Daehan Steel and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Daehan Steel and Korea Shipbuilding
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.53 times more return on investment than Korea Shipbuilding. However, Daehan Steel is 1.88 times less risky than Korea Shipbuilding. It trades about -0.02 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about -0.01 per unit of risk. If you would invest 1,665,000 in Daehan Steel on October 28, 2024 and sell it today you would lose (10,000) from holding Daehan Steel or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| Daehan Steel |
| Korea Shipbuilding |
Daehan Steel and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Korea Shipbuilding
The main advantage of trading using opposite Daehan Steel and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Korea Shipbuilding 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 Korea Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.| Daehan Steel vs. LG Chemicals | Daehan Steel vs. POSCO Holdings | Daehan Steel vs. Hanwha Solutions | Daehan Steel vs. Lotte Chemical Corp |
| Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. KB Financial Group | Korea Shipbuilding vs. Shinhan Financial Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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