Correlation Between Daiyang Metal and J Steel

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

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

Diversification Opportunities for Daiyang Metal and J Steel

-0.34

Correlation Coefficient

Daiyang Metal  J Steel

Very good diversification

The 3 months correlation between Daiyang and 023440 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and J Steel go up and down completely randomly.

Pair Corralation between Daiyang Metal and J Steel

Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, Daiyang Metal Co is 1.84 times less risky than J Steel. The stock trades about -0.15 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  170,200  in J Steel Co on December 25, 2024 and sell it today you would earn a total of  13,800  from holding J Steel Co or generate 8.11% return on investment over 90 days.

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

Daiyang Metal Co  vs.  J Steel Co

Daiyang Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daiyang Metal Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

J Steel

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Daiyang Metal and J Steel

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

The idea behind Daiyang Metal Co and J Steel 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.