Correlation Between Digital Multimedia and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Digital Multimedia and Hankuk 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 Digital Multimedia and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Multimedia Technology and Hankuk Steel Wire, you can compare the effects of market volatilities on Digital Multimedia and Hankuk 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 Digital Multimedia with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Multimedia and Hankuk Steel.
Diversification Opportunities for Digital Multimedia and Hankuk Steel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Digital and Hankuk is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Digital Multimedia Technology and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Digital Multimedia 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 Digital Multimedia Technology are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Digital Multimedia i.e., Digital Multimedia and Hankuk Steel go up and down completely randomly.
Pair Corralation between Digital Multimedia and Hankuk Steel
Assuming the 90 days trading horizon Digital Multimedia Technology is expected to under-perform the Hankuk Steel. In addition to that, Digital Multimedia is 2.22 times more volatile than Hankuk Steel Wire. It trades about -0.05 of its total potential returns per unit of risk. Hankuk Steel Wire is currently generating about -0.04 per unit of volatility. If you would invest 422,044 in Hankuk Steel Wire on August 30, 2024 and sell it today you would lose (122,544) from holding Hankuk Steel Wire or give up 29.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.64% |
| Values | Daily Returns |
Digital Multimedia Technology vs. Hankuk Steel Wire
Performance |
| Timeline |
| Digital Multimedia |
| Hankuk Steel Wire |
Digital Multimedia and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Multimedia and Hankuk Steel
The main advantage of trading using opposite Digital Multimedia and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Multimedia position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Digital Multimedia vs. AptaBio Therapeutics | Digital Multimedia vs. Daewoo SBI SPAC | Digital Multimedia vs. Dream Security co | Digital Multimedia vs. Microfriend |
| Hankuk Steel vs. Top Material Co | Hankuk Steel vs. Iljin Materials Co | Hankuk Steel vs. INNOX Advanced Materials | Hankuk Steel vs. Digital Multimedia 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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