Correlation Between Damsan JSC and Tienlen Steel
Can any of the company-specific risk be diversified away by investing in both Damsan JSC and Tienlen 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 Damsan JSC and Tienlen Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Damsan JSC and Tienlen Steel Corp, you can compare the effects of market volatilities on Damsan JSC and Tienlen 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 Damsan JSC with a short position of Tienlen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Tienlen Steel.
Diversification Opportunities for Damsan JSC and Tienlen Steel
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Damsan and Tienlen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp and Damsan JSC 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 Damsan JSC are associated (or correlated) with Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of Damsan JSC i.e., Damsan JSC and Tienlen Steel go up and down completely randomly.
Pair Corralation between Damsan JSC and Tienlen Steel
Assuming the 90 days trading horizon Damsan JSC is expected to generate 0.62 times more return on investment than Tienlen Steel. However, Damsan JSC is 1.62 times less risky than Tienlen Steel. It trades about -0.31 of its potential returns per unit of risk. Tienlen Steel Corp is currently generating about -0.57 per unit of risk. If you would invest 929,000 in Damsan JSC on August 28, 2024 and sell it today you would lose (51,000) from holding Damsan JSC or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Damsan JSC vs. Tienlen Steel Corp
Performance |
| Timeline |
| Damsan JSC |
| Tienlen Steel Corp |
Damsan JSC and Tienlen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Damsan JSC and Tienlen Steel
The main advantage of trading using opposite Damsan JSC and Tienlen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC position performs unexpectedly, Tienlen 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 Tienlen Steel will offset losses from the drop in Tienlen Steel's long position.| Damsan JSC vs. Fecon Mining JSC | Damsan JSC vs. Saigon Telecommunication Technologies | Damsan JSC vs. Investment and Industrial | Damsan JSC vs. VTC Telecommunications JSC |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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