Correlation Between Daehan Steel and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Busan Industrial 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 Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Busan Industrial Co, you can compare the effects of market volatilities on Daehan Steel and Busan Industrial 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Busan Industrial.
Diversification Opportunities for Daehan Steel and Busan Industrial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daehan and Busan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Daehan Steel i.e., Daehan Steel and Busan Industrial go up and down completely randomly.
Pair Corralation between Daehan Steel and Busan Industrial
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.47 times more return on investment than Busan Industrial. However, Daehan Steel is 2.15 times less risky than Busan Industrial. It trades about -0.2 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.3 per unit of risk. If you would invest 1,662,000 in Daehan Steel on October 14, 2024 and sell it today you would lose (66,000) from holding Daehan Steel or give up 3.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Busan Industrial Co
Performance |
| Timeline |
| Daehan Steel |
| Busan Industrial |
Daehan Steel and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Busan Industrial
The main advantage of trading using opposite Daehan Steel and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Daehan Steel vs. Seers Technology | Daehan Steel vs. iNtRON Biotechnology | Daehan Steel vs. Global Standard Technology | Daehan Steel vs. KG Eco Technology |
| Busan Industrial vs. Fine Besteel Co | Busan Industrial vs. Daehan Steel | Busan Industrial vs. Shin Steel Co | Busan Industrial vs. Jin Air 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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