Correlation Between SBI Investment and Duksan Hi

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

By analyzing existing cross correlation between SBI Investment KOREA and Duksan Hi Metal, you can compare the effects of market volatilities on SBI Investment 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 SBI Investment with a short position of Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Duksan Hi.

Diversification Opportunities for SBI Investment and Duksan Hi

-0.28

Correlation Coefficient

SBI Investment  Duksan Hi

Very good diversification

The 3 months correlation between SBI and Duksan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA 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 SBI Investment 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 SBI Investment KOREA 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 SBI Investment i.e., SBI Investment and Duksan Hi go up and down completely randomly.

Pair Corralation between SBI Investment and Duksan Hi

Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Duksan Hi. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 1.47 times less risky than Duksan Hi. The stock trades about -0.11 of its potential returns per unit of risk. The Duksan Hi Metal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  383,000  in Duksan Hi Metal on December 24, 2024 and sell it today you would earn a total of  69,000  from holding Duksan Hi Metal or generate 18.02% return on investment over 90 days.

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

SBI Investment KOREA  vs.  Duksan Hi Metal

SBI Investment KOREA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBI Investment KOREA 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.

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 9 (%) 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 SBI Investment and Duksan Hi

The main advantage of trading using opposite SBI Investment and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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 SBI Investment KOREA 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.