Correlation Between Daejung Chemicals and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Daehan 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 Daehan 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 Daehan Steel, you can compare the effects of market volatilities on Daejung Chemicals and Daehan 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Daehan Steel.
Diversification Opportunities for Daejung Chemicals and Daehan Steel
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daejung and Daehan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Daehan Steel go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Daehan Steel
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Daehan Steel. In addition to that, Daejung Chemicals is 1.03 times more volatile than Daehan Steel. It trades about -0.02 of its total potential returns per unit of risk. Daehan Steel is currently generating about 0.05 per unit of volatility. If you would invest 1,091,933 in Daehan Steel on September 3, 2024 and sell it today you would earn a total of 459,067 from holding Daehan Steel or generate 42.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Daehan Steel
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Daehan Steel |
Daejung Chemicals and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Daehan Steel
The main advantage of trading using opposite Daejung Chemicals and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan 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 |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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