Correlation Between Daechang Steel and Daol Investment
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and Daol Investment 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 Daechang Steel and Daol Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daechang Steel Co and Daol Investment Securities, you can compare the effects of market volatilities on Daechang Steel and Daol Investment 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 Daechang Steel with a short position of Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and Daol Investment.
Diversification Opportunities for Daechang Steel and Daol Investment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daechang and Daol is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu and Daechang Steel 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 Daechang Steel Co are associated (or correlated) with Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Daechang Steel i.e., Daechang Steel and Daol Investment go up and down completely randomly.
Pair Corralation between Daechang Steel and Daol Investment
Assuming the 90 days trading horizon Daechang Steel Co is expected to under-perform the Daol Investment. But the stock apears to be less risky and, when comparing its historical volatility, Daechang Steel Co is 1.79 times less risky than Daol Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Daol Investment Securities is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 330,458 in Daol Investment Securities on October 25, 2024 and sell it today you would lose (27,458) from holding Daol Investment Securities or give up 8.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. Daol Investment Securities
Performance |
| Timeline |
| Daechang Steel |
| Daol Investment Secu |
Daechang Steel and Daol Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and Daol Investment
The main advantage of trading using opposite Daechang Steel and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's long position.| Daechang Steel vs. LG Chemicals | Daechang Steel vs. POSCO Holdings | Daechang Steel vs. Hanwha Solutions | Daechang Steel vs. Lotte Chemical Corp |
| Daol Investment vs. Dongil Metal Co | Daol Investment vs. Heungkuk Metaltech CoLtd | Daol Investment vs. Air Busan Co | Daol Investment vs. Display Tech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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