Correlation Between Daechang Steel and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and Nasmedia 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 Nasmedia 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 Nasmedia Co, you can compare the effects of market volatilities on Daechang Steel and Nasmedia 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 Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and Nasmedia.
Diversification Opportunities for Daechang Steel and Nasmedia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daechang and Nasmedia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia 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 Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Daechang Steel i.e., Daechang Steel and Nasmedia go up and down completely randomly.
Pair Corralation between Daechang Steel and Nasmedia
Assuming the 90 days trading horizon Daechang Steel Co is expected to generate 0.79 times more return on investment than Nasmedia. However, Daechang Steel Co is 1.27 times less risky than Nasmedia. It trades about -0.02 of its potential returns per unit of risk. Nasmedia Co is currently generating about -0.08 per unit of risk. If you would invest 253,000 in Daechang Steel Co on September 3, 2024 and sell it today you would lose (29,000) from holding Daechang Steel Co or give up 11.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. Nasmedia Co
Performance |
| Timeline |
| Daechang Steel |
| Nasmedia |
Daechang Steel and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and Nasmedia
The main advantage of trading using opposite Daechang Steel and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Daechang Steel vs. LG Chemicals | Daechang Steel vs. POSCO Holdings | Daechang Steel vs. Hanwha Solutions | Daechang Steel vs. Lotte Chemical Corp |
| Nasmedia vs. Korea New Network | Nasmedia vs. ICD Co | Nasmedia vs. DYPNF CoLtd | Nasmedia vs. Busan Industrial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges |