Correlation Between Daechang Steel and BYON
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and BYON 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 BYON 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 BYON Co, you can compare the effects of market volatilities on Daechang Steel and BYON 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 BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and BYON.
Diversification Opportunities for Daechang Steel and BYON
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daechang and BYON is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON 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 BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Daechang Steel i.e., Daechang Steel and BYON go up and down completely randomly.
Pair Corralation between Daechang Steel and BYON
Assuming the 90 days trading horizon Daechang Steel Co is expected to generate 0.34 times more return on investment than BYON. However, Daechang Steel Co is 2.91 times less risky than BYON. It trades about -0.03 of its potential returns per unit of risk. BYON Co is currently generating about -0.04 per unit of risk. If you would invest 240,296 in Daechang Steel Co on November 3, 2024 and sell it today you would lose (35,296) from holding Daechang Steel Co or give up 14.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. BYON Co
Performance |
| Timeline |
| Daechang Steel |
| BYON |
Daechang Steel and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and BYON
The main advantage of trading using opposite Daechang Steel and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.| Daechang Steel vs. Daol Investment Securities | Daechang Steel vs. Golden Bridge Investment | Daechang Steel vs. Korea Shipbuilding Offshore | Daechang Steel vs. Coloray International Investment |
| BYON vs. INNOX Advanced Materials | BYON vs. Seoyon Topmetal Co | BYON vs. Formetal Co | BYON vs. MetaLabs 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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