Correlation Between Tcc Steel and Dongbu Insurance

Can any of the company-specific risk be diversified away by investing in both Tcc Steel and Dongbu Insurance 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 Tcc Steel and Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tcc Steel and Dongbu Insurance Co, you can compare the effects of market volatilities on Tcc Steel and Dongbu Insurance 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 Tcc Steel with a short position of Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tcc Steel and Dongbu Insurance.

Diversification Opportunities for Tcc Steel and Dongbu Insurance

0.78

Correlation Coefficient

Tcc Steel  Dongbu Insurance

Poor diversification

The 3 months correlation between Tcc and Dongbu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tcc Steel and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance and Tcc 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 Tcc Steel are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Tcc Steel i.e., Tcc Steel and Dongbu Insurance go up and down completely randomly.

Pair Corralation between Tcc Steel and Dongbu Insurance

Assuming the 90 days trading horizon Tcc Steel is expected to under-perform the Dongbu Insurance. In addition to that, Tcc Steel is 1.73 times more volatile than Dongbu Insurance Co. It trades about -0.1 of its total potential returns per unit of risk. Dongbu Insurance Co is currently generating about 0.0 per unit of volatility. If you would invest  10,900,000  in Dongbu Insurance Co on September 29, 2024 and sell it today you would lose (490,000) from holding Dongbu Insurance Co or give up 4.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tcc Steel  vs.  Dongbu Insurance Co

Tcc Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tcc Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dongbu Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongbu Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dongbu Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tcc Steel and Dongbu Insurance

The main advantage of trading using opposite Tcc Steel and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tcc Steel position performs unexpectedly, Dongbu Insurance 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 Insurance will offset losses from the drop in Dongbu Insurance's long position.

The idea behind Tcc Steel and Dongbu Insurance Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.