Correlation Between Daehan Steel and BIT Computer

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

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

Diversification Opportunities for Daehan Steel and BIT Computer

-0.14

Correlation Coefficient

Daehan Steel  BIT Computer

Good diversification

The 3 months correlation between Daehan and BIT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer and Daehan 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 Daehan Steel are associated (or correlated) with BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of Daehan Steel i.e., Daehan Steel and BIT Computer go up and down completely randomly.

Pair Corralation between Daehan Steel and BIT Computer

Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.87 times more return on investment than BIT Computer. However, Daehan Steel is 1.15 times less risky than BIT Computer. It trades about 0.22 of its potential returns per unit of risk. BIT Computer Co is currently generating about -0.04 per unit of risk. If you would invest  1,311,000  in Daehan Steel on September 26, 2024 and sell it today you would earn a total of  353,000  from holding Daehan Steel or generate 26.93% return on investment over 90 days.

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

Daehan Steel  vs.  BIT Computer Co

Daehan Steel

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Steel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daehan Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

BIT Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIT Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIT Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daehan Steel and BIT Computer

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

The idea behind Daehan Steel and BIT Computer 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.