Correlation Between MPLUS Corp and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both MPLUS Corp and Daehan 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 MPLUS Corp and Daehan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mPLUS Corp and Daehan Steel, you can compare the effects of market volatilities on MPLUS Corp and Daehan 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 MPLUS Corp with a short position of Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLUS Corp and Daehan Steel.
Diversification Opportunities for MPLUS Corp and Daehan Steel
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MPLUS and Daehan is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding mPLUS Corp and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel and MPLUS Corp 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 mPLUS Corp are associated (or correlated) with Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of MPLUS Corp i.e., MPLUS Corp and Daehan Steel go up and down completely randomly.
Pair Corralation between MPLUS Corp and Daehan Steel
Assuming the 90 days trading horizon mPLUS Corp is expected to under-perform the Daehan Steel. But the stock apears to be less risky and, when comparing its historical volatility, mPLUS Corp is 1.08 times less risky than Daehan Steel. The stock trades about -0.41 of its potential returns per unit of risk. The Daehan Steel is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,333,000 in Daehan Steel on September 1, 2024 and sell it today you would earn a total of 218,000 from holding Daehan Steel or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
mPLUS Corp vs. Daehan Steel
Performance |
| Timeline |
| mPLUS Corp |
| Daehan Steel |
MPLUS Corp and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPLUS Corp and Daehan Steel
The main advantage of trading using opposite MPLUS Corp and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPLUS Corp position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.| MPLUS Corp vs. Dongil Steel Co | MPLUS Corp vs. Kbi Metal Co | MPLUS Corp vs. Shinhan Inverse Silver | MPLUS Corp vs. Ni Steel |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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