Correlation Between Daehan Steel and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Cube Entertainment 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 Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Cube Entertainment, you can compare the effects of market volatilities on Daehan Steel and Cube Entertainment 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Cube Entertainment.
Diversification Opportunities for Daehan Steel and Cube Entertainment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daehan and Cube is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Daehan Steel i.e., Daehan Steel and Cube Entertainment go up and down completely randomly.
Pair Corralation between Daehan Steel and Cube Entertainment
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.92 times more return on investment than Cube Entertainment. However, Daehan Steel is 1.09 times less risky than Cube Entertainment. It trades about 0.28 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.25 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daehan Steel vs. Cube Entertainment
Performance |
| Timeline |
| Daehan Steel |
| Cube Entertainment |
Daehan Steel and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Cube Entertainment
The main advantage of trading using opposite Daehan Steel and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment'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 |
| Cube Entertainment vs. Samsung Electronics Co | Cube Entertainment vs. Samsung Electronics Co | Cube Entertainment vs. LG Energy Solution | Cube Entertainment vs. SK Hynix |
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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