Correlation Between Korea Steel and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Moonbae 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 Korea Steel and Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and Moonbae Steel, you can compare the effects of market volatilities on Korea Steel and Moonbae 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 Korea Steel with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Moonbae Steel.
Diversification Opportunities for Korea Steel and Moonbae Steel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Moonbae is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and Korea 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 Korea Steel Co are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Korea Steel i.e., Korea Steel and Moonbae Steel go up and down completely randomly.
Pair Corralation between Korea Steel and Moonbae Steel
Assuming the 90 days trading horizon Korea Steel Co is expected to generate 1.42 times more return on investment than Moonbae Steel. However, Korea Steel is 1.42 times more volatile than Moonbae Steel. It trades about 0.57 of its potential returns per unit of risk. Moonbae Steel is currently generating about 0.17 per unit of risk. If you would invest 131,600 in Korea Steel Co on October 11, 2024 and sell it today you would earn a total of 37,500 from holding Korea Steel Co or generate 28.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Korea Steel Co vs. Moonbae Steel
Performance |
Timeline |
Korea Steel |
Moonbae Steel |
Korea Steel and Moonbae Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea Steel and Moonbae Steel
The main advantage of trading using opposite Korea Steel and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Moonbae 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.Korea Steel vs. Ssangyong Information Communication | Korea Steel vs. Genie Music | Korea Steel vs. Cloud Air CoLtd | Korea Steel vs. Nice Information Telecommunication |
Moonbae Steel vs. Innowireless Co | Moonbae Steel vs. GS Engineering Construction | Moonbae Steel vs. Korea Information Communications | Moonbae Steel vs. Nable Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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