Correlation Between Seah Steel and Dongil Steel
Can any of the company-specific risk be diversified away by investing in both Seah Steel and Dongil 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 Seah Steel and Dongil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seah Steel Corp and Dongil Steel Co, you can compare the effects of market volatilities on Seah Steel and Dongil 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 Seah Steel with a short position of Dongil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seah Steel and Dongil Steel.
Diversification Opportunities for Seah Steel and Dongil Steel
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seah and Dongil is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seah Steel Corp and Dongil Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Steel and Seah 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 Seah Steel Corp are associated (or correlated) with Dongil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Steel has no effect on the direction of Seah Steel i.e., Seah Steel and Dongil Steel go up and down completely randomly.
Pair Corralation between Seah Steel and Dongil Steel
Assuming the 90 days trading horizon Seah Steel Corp is expected to generate 1.63 times more return on investment than Dongil Steel. However, Seah Steel is 1.63 times more volatile than Dongil Steel Co. It trades about 0.06 of its potential returns per unit of risk. Dongil Steel Co is currently generating about -0.17 per unit of risk. If you would invest 11,410,000 in Seah Steel Corp on August 25, 2024 and sell it today you would earn a total of 280,000 from holding Seah Steel Corp or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seah Steel Corp vs. Dongil Steel Co
Performance |
| Timeline |
| Seah Steel Corp |
| Dongil Steel |
Seah Steel and Dongil Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seah Steel and Dongil Steel
The main advantage of trading using opposite Seah Steel and Dongil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seah Steel position performs unexpectedly, Dongil 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 Dongil Steel will offset losses from the drop in Dongil Steel's long position.| Seah Steel vs. GS Engineering Construction | Seah Steel vs. Camus Engineering Construction | Seah Steel vs. Alton Sports CoLtd | Seah Steel vs. Display Tech Co |
| Dongil Steel vs. Namhwa Industrial Co | Dongil Steel vs. Green Cross Medical | Dongil Steel vs. Busan Industrial Co | Dongil Steel vs. Homecast CoLtd |
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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