Correlation Between Daehan Steel and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Namhae Chemical 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 Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Namhae Chemical, you can compare the effects of market volatilities on Daehan Steel and Namhae Chemical 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Namhae Chemical.
Diversification Opportunities for Daehan Steel and Namhae Chemical
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daehan and Namhae is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Daehan Steel i.e., Daehan Steel and Namhae Chemical go up and down completely randomly.
Pair Corralation between Daehan Steel and Namhae Chemical
Assuming the 90 days trading horizon Daehan Steel is expected to generate 2.8 times more return on investment than Namhae Chemical. However, Daehan Steel is 2.8 times more volatile than Namhae Chemical. It trades about 0.19 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.13 per unit of risk. If you would invest 1,351,000 in Daehan Steel on August 25, 2024 and sell it today you would earn a total of 167,000 from holding Daehan Steel or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Namhae Chemical
Performance |
| Timeline |
| Daehan Steel |
| Namhae Chemical |
Daehan Steel and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Namhae Chemical
The main advantage of trading using opposite Daehan Steel and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Daehan Steel vs. Sungchang Autotech Co | Daehan Steel vs. Nh Investment And | Daehan Steel vs. Lion Chemtech Co | Daehan Steel vs. EBEST Investment Securities |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. Lotte Chemical Corp | Namhae Chemical vs. Hyundai Steel | Namhae Chemical vs. Dongkuk Steel Mill |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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