Correlation Between Coloray International and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Coloray International and Dongbu 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 Coloray International and Dongbu Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Dongbu Steel Co, you can compare the effects of market volatilities on Coloray International and Dongbu 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 Coloray International with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Dongbu Steel.
Diversification Opportunities for Coloray International and Dongbu Steel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coloray and Dongbu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel and Coloray International 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 Coloray International Investment are associated (or correlated) with Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Coloray International i.e., Coloray International and Dongbu Steel go up and down completely randomly.
Pair Corralation between Coloray International and Dongbu Steel
Assuming the 90 days trading horizon Coloray International Investment is expected to under-perform the Dongbu Steel. But the stock apears to be less risky and, when comparing its historical volatility, Coloray International Investment is 1.09 times less risky than Dongbu Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Dongbu Steel Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 831,027 in Dongbu Steel Co on August 27, 2024 and sell it today you would lose (206,027) from holding Dongbu Steel Co or give up 24.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Dongbu Steel Co
Performance |
| Timeline |
| Coloray International |
| Dongbu Steel |
Coloray International and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Dongbu Steel
The main advantage of trading using opposite Coloray International and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Dongbu 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| Coloray International vs. Shinsung Delta Tech | Coloray International vs. PH Tech Co | Coloray International vs. FOODWELL Co | Coloray International vs. Orbitech Co |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. Lotte Chemical Corp | Dongbu Steel vs. Hyundai Steel | Dongbu Steel vs. Seah Steel Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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