Correlation Between Daejung Chemicals and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Hwangkum 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 Daejung Chemicals and Hwangkum Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Hwangkum Steel Technology, you can compare the effects of market volatilities on Daejung Chemicals and Hwangkum 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 Daejung Chemicals with a short position of Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Hwangkum Steel.
Diversification Opportunities for Daejung Chemicals and Hwangkum Steel
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Hwangkum is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology and Daejung Chemicals 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 Daejung Chemicals Metals are associated (or correlated) with Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Hwangkum Steel go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Hwangkum Steel
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 1.21 times more return on investment than Hwangkum Steel. However, Daejung Chemicals is 1.21 times more volatile than Hwangkum Steel Technology. It trades about -0.05 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about -0.11 per unit of risk. If you would invest 1,651,438 in Daejung Chemicals Metals on November 2, 2024 and sell it today you would lose (331,438) from holding Daejung Chemicals Metals or give up 20.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Hwangkum Steel Technology
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Hwangkum Steel Technology |
Daejung Chemicals and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Hwangkum Steel
The main advantage of trading using opposite Daejung Chemicals and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Hwangkum 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
| Hwangkum Steel vs. Moonbae Steel | Hwangkum Steel vs. Bookook Steel | Hwangkum Steel vs. Hankuk Steel Wire | Hwangkum Steel vs. Puloon 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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