Correlation Between Moonbae Steel and Duksan Hi

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

By analyzing existing cross correlation between Moonbae Steel and Duksan Hi Metal, you can compare the effects of market volatilities on Moonbae Steel and Duksan Hi 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 Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Duksan Hi.

Diversification Opportunities for Moonbae Steel and Duksan Hi

0.44

Correlation Coefficient

Moonbae Steel  Duksan Hi

Very weak diversification

The 3 months correlation between Moonbae and Duksan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Duksan Hi go up and down completely randomly.

Pair Corralation between Moonbae Steel and Duksan Hi

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.5 times less return on investment than Duksan Hi. In addition to that, Moonbae Steel is 1.06 times more volatile than Duksan Hi Metal. It trades about 0.06 of its total potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.09 per unit of volatility. If you would invest  379,000  in Duksan Hi Metal on December 25, 2024 and sell it today you would earn a total of  49,500  from holding Duksan Hi Metal or generate 13.06% return on investment over 90 days.

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

Moonbae Steel  vs.  Duksan Hi Metal

Moonbae Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moonbae Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Duksan Hi Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duksan Hi Metal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duksan Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moonbae Steel and Duksan Hi

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

The idea behind Moonbae Steel and Duksan Hi Metal 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.