Correlation Between Finebesteel and Dongil Metal
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Dongil Metal 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 Finebesteel and Dongil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Dongil Metal Co, you can compare the effects of market volatilities on Finebesteel and Dongil Metal 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 Finebesteel with a short position of Dongil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Dongil Metal.
Diversification Opportunities for Finebesteel and Dongil Metal
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Finebesteel and Dongil is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal and Finebesteel 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 Finebesteel are associated (or correlated) with Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Finebesteel i.e., Finebesteel and Dongil Metal go up and down completely randomly.
Pair Corralation between Finebesteel and Dongil Metal
Assuming the 90 days trading horizon Finebesteel is expected to under-perform the Dongil Metal. In addition to that, Finebesteel is 1.68 times more volatile than Dongil Metal Co. It trades about -0.23 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about -0.22 per unit of volatility. If you would invest 840,000 in Dongil Metal Co on September 24, 2024 and sell it today you would lose (52,000) from holding Dongil Metal Co or give up 6.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Finebesteel vs. Dongil Metal Co
Performance |
Timeline |
Finebesteel |
Dongil Metal |
Finebesteel and Dongil Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Finebesteel and Dongil Metal
The main advantage of trading using opposite Finebesteel and Dongil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Dongil Metal 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 Metal will offset losses from the drop in Dongil Metal's long position.Finebesteel vs. Dong Il Steel | Finebesteel vs. Seah Steel Corp | Finebesteel vs. Ajusteel Co | Finebesteel vs. Ni Steel |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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