Correlation Between DONGKUK STEEL and Ni Steel
Can any of the company-specific risk be diversified away by investing in both DONGKUK STEEL and Ni 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 DONGKUK STEEL and Ni Steel 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 Ni Steel, you can compare the effects of market volatilities on DONGKUK STEEL and Ni 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 DONGKUK STEEL with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DONGKUK STEEL and Ni Steel.
Diversification Opportunities for DONGKUK STEEL and Ni Steel
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DONGKUK and 008260 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding DONGKUK STEEL MILL and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel 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 Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of DONGKUK STEEL i.e., DONGKUK STEEL and Ni Steel go up and down completely randomly.
Pair Corralation between DONGKUK STEEL and Ni Steel
Assuming the 90 days trading horizon DONGKUK STEEL MILL is expected to generate 1.67 times more return on investment than Ni Steel. However, DONGKUK STEEL is 1.67 times more volatile than Ni Steel. It trades about -0.03 of its potential returns per unit of risk. Ni Steel is currently generating about -0.06 per unit of risk. If you would invest 1,484,000 in DONGKUK STEEL MILL on August 29, 2024 and sell it today you would lose (644,000) from holding DONGKUK STEEL MILL or give up 43.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.91% |
| Values | Daily Returns |
DONGKUK STEEL MILL vs. Ni Steel
Performance |
| Timeline |
| DONGKUK STEEL MILL |
| Ni Steel |
DONGKUK STEEL and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DONGKUK STEEL and Ni Steel
The main advantage of trading using opposite DONGKUK STEEL and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DONGKUK STEEL position performs unexpectedly, Ni 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 Ni Steel will offset losses from the drop in Ni Steel's 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 |
| Ni Steel vs. Jeju Air Co | Ni Steel vs. Daejoo Electronic Materials | Ni Steel vs. TOPMATERIAL LTD | Ni Steel vs. LAKE MATERIALS LTD |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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