Correlation Between Daechang Steel and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and Daehan 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 Daechang Steel and Daehan Steel 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 Daehan Steel, you can compare the effects of market volatilities on Daechang Steel and Daehan 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 Daechang Steel with a short position of Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and Daehan Steel.
Diversification Opportunities for Daechang Steel and Daehan Steel
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daechang and Daehan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Daechang Steel i.e., Daechang Steel and Daehan Steel go up and down completely randomly.
Pair Corralation between Daechang Steel and Daehan Steel
Assuming the 90 days trading horizon Daechang Steel is expected to generate 22.57 times less return on investment than Daehan Steel. But when comparing it to its historical volatility, Daechang Steel Co is 1.26 times less risky than Daehan Steel. It trades about 0.01 of its potential returns per unit of risk. Daehan Steel is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,351,000 in Daehan Steel on August 25, 2024 and sell it today you would earn a total of 167,000 from holding Daehan Steel or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. Daehan Steel
Performance |
| Timeline |
| Daechang Steel |
| Daehan Steel |
Daechang Steel and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and Daehan Steel
The main advantage of trading using opposite Daechang Steel and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.| Daechang Steel vs. LG Chemicals | Daechang Steel vs. POSCO Holdings | Daechang Steel vs. Lotte Chemical Corp | Daechang Steel vs. Hyundai Steel |
| Daehan Steel vs. Sungchang Autotech Co | Daehan Steel vs. Nh Investment And | Daehan Steel vs. Lion Chemtech Co | Daehan Steel vs. EBEST Investment Securities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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