Correlation Between Moonbae Steel and Daebo Magnetic

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

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

Diversification Opportunities for Moonbae Steel and Daebo Magnetic

0.16

Correlation Coefficient

Moonbae Steel  Daebo Magnetic

Average diversification

The 3 months correlation between Moonbae and Daebo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Daebo Magnetic CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daebo Magnetic 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 Daebo Magnetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daebo Magnetic CoLtd has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Daebo Magnetic go up and down completely randomly.

Pair Corralation between Moonbae Steel and Daebo Magnetic

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 0.55 times more return on investment than Daebo Magnetic. However, Moonbae Steel is 1.81 times less risky than Daebo Magnetic. It trades about -0.03 of its potential returns per unit of risk. Daebo Magnetic CoLtd is currently generating about -0.08 per unit of risk. If you would invest  325,208  in Moonbae Steel on September 14, 2024 and sell it today you would lose (90,708) from holding Moonbae Steel or give up 27.89% of portfolio value over 90 days.

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

Moonbae Steel  vs.  Daebo Magnetic CoLtd

Moonbae Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Daebo Magnetic CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daebo Magnetic CoLtd 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.

Pair Trading with Moonbae Steel and Daebo Magnetic

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

The idea behind Moonbae Steel and Daebo Magnetic 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.