Correlation Between Drb Industrial and Shin Steel
Can any of the company-specific risk be diversified away by investing in both Drb Industrial and Shin 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 Drb Industrial and Shin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Drb Industrial and Shin Steel Co, you can compare the effects of market volatilities on Drb Industrial and Shin 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 Drb Industrial with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drb Industrial and Shin Steel.
Diversification Opportunities for Drb Industrial and Shin Steel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Drb and Shin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Drb Industrial and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and Drb Industrial 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 Drb Industrial are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Drb Industrial i.e., Drb Industrial and Shin Steel go up and down completely randomly.
Pair Corralation between Drb Industrial and Shin Steel
Assuming the 90 days trading horizon Drb Industrial is expected to generate 0.78 times more return on investment than Shin Steel. However, Drb Industrial is 1.27 times less risky than Shin Steel. It trades about 0.02 of its potential returns per unit of risk. Shin Steel Co is currently generating about -0.03 per unit of risk. If you would invest 617,000 in Drb Industrial on October 18, 2024 and sell it today you would earn a total of 102,000 from holding Drb Industrial or generate 16.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Drb Industrial vs. Shin Steel Co
Performance |
| Timeline |
| Drb Industrial |
| Shin Steel |
Drb Industrial and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Drb Industrial and Shin Steel
The main advantage of trading using opposite Drb Industrial and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drb Industrial position performs unexpectedly, Shin 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 Shin Steel will offset losses from the drop in Shin Steel's long position.| Drb Industrial vs. Hanwha Chemical Corp | Drb Industrial vs. LS Materials | Drb Industrial vs. SH Energy Chemical | Drb Industrial vs. Namhae Chemical |
| Shin Steel vs. Sam Yang Foods | Shin Steel vs. Shinil Industrial Co | Shin Steel vs. Drb Industrial | Shin Steel vs. Hankook Furniture 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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