Correlation Between Hyosung Advanced and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Daedong 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 Hyosung Advanced and Daedong Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and Daedong Steel Co, you can compare the effects of market volatilities on Hyosung Advanced and Daedong 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 Hyosung Advanced with a short position of Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Daedong Steel.
Diversification Opportunities for Hyosung Advanced and Daedong Steel
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyosung and Daedong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Steel and Hyosung Advanced 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 Hyosung Advanced Materials are associated (or correlated) with Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Daedong Steel go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Daedong Steel
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Daedong Steel. In addition to that, Hyosung Advanced is 1.26 times more volatile than Daedong Steel Co. It trades about -0.18 of its total potential returns per unit of risk. Daedong Steel Co is currently generating about -0.07 per unit of volatility. If you would invest 366,500 in Daedong Steel Co on September 25, 2024 and sell it today you would lose (37,500) from holding Daedong Steel Co or give up 10.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hyosung Advanced Materials vs. Daedong Steel Co
Performance |
Timeline |
Hyosung Advanced Mat |
Daedong Steel |
Hyosung Advanced and Daedong Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyosung Advanced and Daedong Steel
The main advantage of trading using opposite Hyosung Advanced and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Daedong 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Korea Air Svc | Hyosung Advanced vs. AnterogenCoLtd | Hyosung Advanced vs. LG Uplus |
Daedong Steel vs. Hanmi Semiconductor Co | Daedong Steel vs. Hyosung Advanced Materials | Daedong Steel vs. Ssangyong Materials Corp | Daedong Steel vs. Daejoo Electronic Materials |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |