Correlation Between DSC Investment and Daechang Steel
Can any of the company-specific risk be diversified away by investing in both DSC Investment and Daechang 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 DSC Investment and Daechang Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Daechang Steel Co, you can compare the effects of market volatilities on DSC Investment and Daechang 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 DSC Investment with a short position of Daechang Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Daechang Steel.
Diversification Opportunities for DSC Investment and Daechang Steel
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between DSC and Daechang is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and Daechang Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daechang Steel and DSC Investment 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 DSC Investment are associated (or correlated) with Daechang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daechang Steel has no effect on the direction of DSC Investment i.e., DSC Investment and Daechang Steel go up and down completely randomly.
Pair Corralation between DSC Investment and Daechang Steel
Assuming the 90 days trading horizon DSC Investment is expected to under-perform the Daechang Steel. But the stock apears to be less risky and, when comparing its historical volatility, DSC Investment is 1.06 times less risky than Daechang Steel. The stock trades about -0.12 of its potential returns per unit of risk. The Daechang Steel Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 209,500 in Daechang Steel Co on October 30, 2024 and sell it today you would lose (2,000) from holding Daechang Steel Co or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSC Investment vs. Daechang Steel Co
Performance |
| Timeline |
| DSC Investment |
| Daechang Steel |
DSC Investment and Daechang Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSC Investment and Daechang Steel
The main advantage of trading using opposite DSC Investment and Daechang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment position performs unexpectedly, Daechang 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 Daechang Steel will offset losses from the drop in Daechang Steel's long position.| DSC Investment vs. Duksan Hi Metal | DSC Investment vs. Kbi Metal Co | DSC Investment vs. Seoyon Topmetal Co | DSC Investment vs. Asiana Airlines |
| Daechang Steel vs. INNOX Advanced Materials | Daechang Steel vs. LAKE MATERIALS LTD | Daechang Steel vs. Shinsegae Engineering Construction | Daechang Steel vs. Hyundai Engineering Construction |
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 Stocks Directory module to find actively traded stocks across global markets.
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