Correlation Between Ajusteel and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Ajusteel and Korea 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 Ajusteel and Korea Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ajusteel Co and Korea Steel Co, you can compare the effects of market volatilities on Ajusteel and Korea 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 Ajusteel with a short position of Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ajusteel and Korea Steel.
Diversification Opportunities for Ajusteel and Korea Steel
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ajusteel and Korea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ajusteel Co and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea 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 Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Ajusteel i.e., Ajusteel and Korea Steel go up and down completely randomly.
Pair Corralation between Ajusteel and Korea Steel
Assuming the 90 days trading horizon Ajusteel Co is expected to under-perform the Korea Steel. In addition to that, Ajusteel is 1.13 times more volatile than Korea Steel Co. It trades about -0.27 of its total potential returns per unit of risk. Korea Steel Co is currently generating about -0.18 per unit of volatility. If you would invest 153,300 in Korea Steel Co on August 29, 2024 and sell it today you would lose (10,600) from holding Korea Steel Co or give up 6.91% 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. Korea Steel Co
Performance |
| Timeline |
| Ajusteel |
| Korea Steel |
Ajusteel and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ajusteel and Korea Steel
The main advantage of trading using opposite Ajusteel and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ajusteel position performs unexpectedly, Korea 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| Ajusteel vs. Anam Electronics Co | Ajusteel vs. Cuckoo Electronics Co | Ajusteel vs. Derkwoo Electronics Co | Ajusteel vs. Samyoung Electronics Co |
| Korea Steel vs. Moadata Co | Korea Steel vs. INNOX Advanced Materials | Korea Steel vs. Lotte Energy Materials | Korea Steel vs. Iljin Materials 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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