Correlation Between Daechang Steel and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Daechang Steel and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and TOPMATERIAL.
Diversification Opportunities for Daechang Steel and TOPMATERIAL
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daechang and TOPMATERIAL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Daechang Steel i.e., Daechang Steel and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Daechang Steel and TOPMATERIAL
Assuming the 90 days trading horizon Daechang Steel Co is expected to generate 0.42 times more return on investment than TOPMATERIAL. However, Daechang Steel Co is 2.35 times less risky than TOPMATERIAL. It trades about -0.01 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.41 per unit of risk. If you would invest 203,500 in Daechang Steel Co on November 6, 2024 and sell it today you would lose (500.00) from holding Daechang Steel Co or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. TOPMATERIAL LTD
Performance |
| Timeline |
| Daechang Steel |
| TOPMATERIAL LTD |
Daechang Steel and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and TOPMATERIAL
The main advantage of trading using opposite Daechang Steel and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| Daechang Steel vs. Korea Petro Chemical | Daechang Steel vs. GS Engineering Construction | Daechang Steel vs. Woorim Machinery Co | Daechang Steel vs. SEOJEON ELECTRIC MACHINERY |
| TOPMATERIAL vs. Korea Electronic Certification | TOPMATERIAL vs. DAEDUCK ELECTRONICS CoLtd | TOPMATERIAL vs. CKH Food Health | TOPMATERIAL vs. Kakao Games Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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