Correlation Between Daehan Steel and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Sewoon Medical 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 Sewoon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Sewoon Medical Co, you can compare the effects of market volatilities on Daehan Steel and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Sewoon Medical.
Diversification Opportunities for Daehan Steel and Sewoon Medical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daehan and Sewoon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of Daehan Steel i.e., Daehan Steel and Sewoon Medical go up and down completely randomly.
Pair Corralation between Daehan Steel and Sewoon Medical
Assuming the 90 days trading horizon Daehan Steel is expected to generate 1.01 times more return on investment than Sewoon Medical. However, Daehan Steel is 1.01 times more volatile than Sewoon Medical Co. It trades about 0.22 of its potential returns per unit of risk. Sewoon Medical Co is currently generating about -0.05 per unit of risk. If you would invest 1,306,000 in Daehan Steel on October 26, 2024 and sell it today you would earn a total of 354,000 from holding Daehan Steel or generate 27.11% 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. Sewoon Medical Co
Performance |
| Timeline |
| Daehan Steel |
| Sewoon Medical |
Daehan Steel and Sewoon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Sewoon Medical
The main advantage of trading using opposite Daehan Steel and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical's long position.| Daehan Steel vs. LG Chemicals | Daehan Steel vs. POSCO Holdings | Daehan Steel vs. Hanwha Solutions | Daehan Steel vs. Lotte Chemical Corp |
| Sewoon Medical vs. Nam Hwa Construction | Sewoon Medical vs. Ilji Technology Co | Sewoon Medical vs. Tuksu Engineering ConstructionLtd | Sewoon Medical vs. Digital Imaging Technology |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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