Correlation Between Moonbae Steel and ASTORY CoLtd

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

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

Diversification Opportunities for Moonbae Steel and ASTORY CoLtd

0.07

Correlation Coefficient

Moonbae Steel  ASTORY CoLtd

Significant diversification

The 3 months correlation between Moonbae and ASTORY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd 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 ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Moonbae Steel and ASTORY CoLtd

Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the ASTORY CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.12 times less risky than ASTORY CoLtd. The stock trades about -0.01 of its potential returns per unit of risk. The ASTORY CoLtd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  729,000  in ASTORY CoLtd on October 6, 2024 and sell it today you would earn a total of  51,000  from holding ASTORY CoLtd or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Moonbae Steel  vs.  ASTORY CoLtd

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.

ASTORY CoLtd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Moonbae Steel and ASTORY CoLtd

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

The idea behind Moonbae Steel and ASTORY CoLtd 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.