Correlation Between Daejung Chemicals and Ajusteel
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Ajusteel 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 Ajusteel 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 Ajusteel Co, you can compare the effects of market volatilities on Daejung Chemicals and Ajusteel 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 Ajusteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Ajusteel.
Diversification Opportunities for Daejung Chemicals and Ajusteel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daejung and Ajusteel is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Ajusteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajusteel 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 Ajusteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajusteel has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Ajusteel go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Ajusteel
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.87 times more return on investment than Ajusteel. However, Daejung Chemicals Metals is 1.15 times less risky than Ajusteel. It trades about -0.16 of its potential returns per unit of risk. Ajusteel Co is currently generating about -0.28 per unit of risk. If you would invest 1,365,000 in Daejung Chemicals Metals on August 28, 2024 and sell it today you would lose (85,000) from holding Daejung Chemicals Metals or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Ajusteel Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Ajusteel |
Daejung Chemicals and Ajusteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Ajusteel
The main advantage of trading using opposite Daejung Chemicals and Ajusteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Ajusteel 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 Ajusteel will offset losses from the drop in Ajusteel's long position.| Daejung Chemicals vs. Dong A Steel Technology | Daejung Chemicals vs. Ni Steel | Daejung Chemicals vs. Jeju Semiconductor Corp | Daejung Chemicals vs. Hankook Steel Co |
| Ajusteel vs. Samyung Trading Co | Ajusteel vs. Formetal Co | Ajusteel vs. Daejung Chemicals Metals | Ajusteel vs. Seoyon Topmetal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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