Correlation Between Daewoo SBI and Dong-A Steel
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Dong-A 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 Daewoo SBI and Dong-A Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Dong A Steel Technology, you can compare the effects of market volatilities on Daewoo SBI and Dong-A 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 Daewoo SBI with a short position of Dong-A Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Dong-A Steel.
Diversification Opportunities for Daewoo SBI and Dong-A Steel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Dong-A is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Dong-A Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Dong-A Steel go up and down completely randomly.
Pair Corralation between Daewoo SBI and Dong-A Steel
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 0.88 times more return on investment than Dong-A Steel. However, Daewoo SBI SPAC is 1.14 times less risky than Dong-A Steel. It trades about 0.31 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about -0.13 per unit of risk. If you would invest 237,000 in Daewoo SBI SPAC on September 14, 2024 and sell it today you would earn a total of 63,000 from holding Daewoo SBI SPAC or generate 26.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Dong A Steel Technology
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Dong A Steel |
Daewoo SBI and Dong-A Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Dong-A Steel
The main advantage of trading using opposite Daewoo SBI and Dong-A Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Dong-A 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 Dong-A Steel will offset losses from the drop in Dong-A Steel's long position.| Daewoo SBI vs. DONGKUK TED METAL | Daewoo SBI vs. Daejung Chemicals Metals | Daewoo SBI vs. Digital Power Communications | Daewoo SBI vs. Dongbang Transport Logistics |
| Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. SK Hynix | Dong-A Steel vs. POSCO Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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