Correlation Between Daehan Steel and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Daehan Steel and Foodnamoo 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 Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Steel and Foodnamoo, you can compare the effects of market volatilities on Daehan Steel and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Steel and Foodnamoo.
Diversification Opportunities for Daehan Steel and Foodnamoo
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daehan and Foodnamoo is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Daehan Steel i.e., Daehan Steel and Foodnamoo go up and down completely randomly.
Pair Corralation between Daehan Steel and Foodnamoo
Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.42 times more return on investment than Foodnamoo. However, Daehan Steel is 2.38 times less risky than Foodnamoo. It trades about 0.17 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.09 per unit of risk. If you would invest 1,295,000 in Daehan Steel on November 2, 2024 and sell it today you would earn a total of 360,000 from holding Daehan Steel or generate 27.8% 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. Foodnamoo
Performance |
| Timeline |
| Daehan Steel |
| Foodnamoo |
Daehan Steel and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daehan Steel and Foodnamoo
The main advantage of trading using opposite Daehan Steel and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Daehan Steel vs. DONGKUK STEEL MILL | Daehan Steel vs. Samhyun Steel Co | Daehan Steel vs. Hironic Co | Daehan Steel vs. Sung Bo Chemicals |
| Foodnamoo vs. Industrial Bank | Foodnamoo vs. Eagon Industrial Co | Foodnamoo vs. Shinil Industrial Co | Foodnamoo vs. Kbi Metal Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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