Correlation Between Ajusteel and Dong Il
Can any of the company-specific risk be diversified away by investing in both Ajusteel and Dong Il 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 Ajusteel and Dong Il into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ajusteel Co and Dong Il Steel, you can compare the effects of market volatilities on Ajusteel and Dong Il 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 Ajusteel with a short position of Dong Il. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ajusteel and Dong Il.
Diversification Opportunities for Ajusteel and Dong Il
Poor diversification
The 3 months correlation between Ajusteel and Dong is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ajusteel Co and Dong Il Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Il Steel and Ajusteel 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 Ajusteel Co are associated (or correlated) with Dong Il. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Il Steel has no effect on the direction of Ajusteel i.e., Ajusteel and Dong Il go up and down completely randomly.
Pair Corralation between Ajusteel and Dong Il
Assuming the 90 days trading horizon Ajusteel Co is expected to under-perform the Dong Il. In addition to that, Ajusteel is 1.01 times more volatile than Dong Il Steel. It trades about -0.09 of its total potential returns per unit of risk. Dong Il Steel is currently generating about -0.06 per unit of volatility. If you would invest 231,808 in Dong Il Steel on August 28, 2024 and sell it today you would lose (98,208) from holding Dong Il Steel or give up 42.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ajusteel Co vs. Dong Il Steel
Performance |
| Timeline |
| Ajusteel |
| Dong Il Steel |
Ajusteel and Dong Il Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ajusteel and Dong Il
The main advantage of trading using opposite Ajusteel and Dong Il positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ajusteel position performs unexpectedly, Dong Il 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 Dong Il will offset losses from the drop in Dong Il's long position.The idea behind Ajusteel Co and Dong Il Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dong Il vs. Shinsegae Information Communication | Dong Il vs. Daejoo Electronic Materials | Dong Il vs. SCI Information Service | Dong Il vs. Samji Electronics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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