Correlation Between Daehan Steel and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Daechang 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 Daechang 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 Daechang Steel Co, you can compare the effects of market volatilities on Daehan Steel and Daechang 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 Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Daechang Steel.
Diversification Opportunities for Daehan Steel and Daechang Steel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daehan and Daechang is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang 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 Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of Daehan Steel i.e., Daehan Steel and Daechang Steel go up and down completely randomly.
Pair Corralation between Daehan Steel and Daechang Steel
Assuming the 90 days trading horizon Daehan Steel is expected to generate 1.26 times more return on investment than Daechang Steel. However, Daehan Steel is 1.26 times more volatile than Daechang Steel Co. It trades about 0.28 of its potential returns per unit of risk. Daechang Steel Co is currently generating about 0.02 per unit of risk. If you would invest 1,306,000 in Daehan Steel on August 29, 2024 and sell it today you would earn a total of 221,000 from holding Daehan Steel or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Daechang Steel Co
Performance |
| Timeline |
| Daehan Steel |
| Daechang Steel |
Daehan Steel and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Daechang Steel
The main advantage of trading using opposite Daehan Steel and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Daechang 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| Daehan Steel vs. LG Chemicals | Daehan Steel vs. Lotte Chemical Corp | Daehan Steel vs. Hyundai Steel | Daehan Steel vs. Seah Steel Corp |
| Daechang Steel vs. LG Chemicals | Daechang Steel vs. Lotte Chemical Corp | Daechang Steel vs. Hyundai Steel | Daechang Steel vs. Seah Steel Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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