Correlation Between Daehan Steel and ATON
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and ATON 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 ATON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and ATON Inc, you can compare the effects of market volatilities on Daehan Steel and ATON 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 ATON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and ATON.
Diversification Opportunities for Daehan Steel and ATON
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daehan and ATON is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of Daehan Steel i.e., Daehan Steel and ATON go up and down completely randomly.
Pair Corralation between Daehan Steel and ATON
Assuming the 90 days trading horizon Daehan Steel is expected to generate 3.77 times less return on investment than ATON. But when comparing it to its historical volatility, Daehan Steel is 6.76 times less risky than ATON. It trades about 0.38 of its potential returns per unit of risk. ATON Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 417,500 in ATON Inc on September 12, 2024 and sell it today you would earn a total of 162,500 from holding ATON Inc or generate 38.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. ATON Inc
Performance |
| Timeline |
| Daehan Steel |
| ATON Inc |
Daehan Steel and ATON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and ATON
The main advantage of trading using opposite Daehan Steel and ATON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, ATON 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 ATON will offset losses from the drop in ATON's long position.| Daehan Steel vs. LG Chemicals | Daehan Steel vs. POSCO Holdings | Daehan Steel vs. Hanwha Solutions | Daehan Steel vs. Lotte Chemical 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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