Correlation Between Moonbae Steel and Daewon Media

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

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

Diversification Opportunities for Moonbae Steel and Daewon Media

0.21

Correlation Coefficient

Moonbae Steel  Daewon Media

Modest diversification

The 3 months correlation between Moonbae and Daewon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media and Moonbae 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 Moonbae Steel are associated (or correlated) with Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Daewon Media go up and down completely randomly.

Pair Corralation between Moonbae Steel and Daewon Media

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 0.88 times more return on investment than Daewon Media. However, Moonbae Steel is 1.14 times less risky than Daewon Media. It trades about -0.03 of its potential returns per unit of risk. Daewon Media Co is currently generating about -0.06 per unit of risk. If you would invest  337,977  in Moonbae Steel on October 4, 2024 and sell it today you would lose (105,977) from holding Moonbae Steel or give up 31.36% of portfolio value over 90 days.

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

Moonbae Steel  vs.  Daewon Media Co

Moonbae Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Daewon Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daewon Media Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Moonbae Steel and Daewon Media

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

The idea behind Moonbae Steel and Daewon Media 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.