Correlation Between DONGKUK STEEL and Daeduck Electronics
Can any of the company-specific risk be diversified away by investing in both DONGKUK STEEL and Daeduck Electronics 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 DONGKUK STEEL and Daeduck Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DONGKUK STEEL MILL and Daeduck Electronics Co, you can compare the effects of market volatilities on DONGKUK STEEL and Daeduck Electronics 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 DONGKUK STEEL with a short position of Daeduck Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DONGKUK STEEL and Daeduck Electronics.
Diversification Opportunities for DONGKUK STEEL and Daeduck Electronics
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DONGKUK and Daeduck is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DONGKUK STEEL MILL and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics and DONGKUK 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 DONGKUK STEEL MILL are associated (or correlated) with Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of DONGKUK STEEL i.e., DONGKUK STEEL and Daeduck Electronics go up and down completely randomly.
Pair Corralation between DONGKUK STEEL and Daeduck Electronics
Assuming the 90 days trading horizon DONGKUK STEEL MILL is expected to generate 4.82 times more return on investment than Daeduck Electronics. However, DONGKUK STEEL is 4.82 times more volatile than Daeduck Electronics Co. It trades about 0.02 of its potential returns per unit of risk. Daeduck Electronics Co is currently generating about -0.23 per unit of risk. If you would invest 823,000 in DONGKUK STEEL MILL on November 6, 2024 and sell it today you would earn a total of 2,000 from holding DONGKUK STEEL MILL or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DONGKUK STEEL MILL vs. Daeduck Electronics Co
Performance |
| Timeline |
| DONGKUK STEEL MILL |
| Daeduck Electronics |
DONGKUK STEEL and Daeduck Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DONGKUK STEEL and Daeduck Electronics
The main advantage of trading using opposite DONGKUK STEEL and Daeduck Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DONGKUK STEEL position performs unexpectedly, Daeduck Electronics 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 Daeduck Electronics will offset losses from the drop in Daeduck Electronics' long position.| DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. LG Energy Solution | DONGKUK STEEL vs. SK Hynix |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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