Correlation Between Daehan Steel and Orbitech

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

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

Diversification Opportunities for Daehan Steel and Orbitech

-0.78

Correlation Coefficient

Daehan Steel  Orbitech

Pay attention - limited upside

The 3 months correlation between Daehan and Orbitech is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech 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 Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Daehan Steel i.e., Daehan Steel and Orbitech go up and down completely randomly.

Pair Corralation between Daehan Steel and Orbitech

Assuming the 90 days trading horizon Daehan Steel is expected to generate 3.47 times less return on investment than Orbitech. But when comparing it to its historical volatility, Daehan Steel is 1.62 times less risky than Orbitech. It trades about 0.11 of its potential returns per unit of risk. Orbitech Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  185,400  in Orbitech Co on October 11, 2024 and sell it today you would earn a total of  16,600  from holding Orbitech Co or generate 8.95% return on investment over 90 days.

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

Daehan Steel  vs.  Orbitech Co

Daehan Steel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Steel are ranked lower than 11 (%) 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.

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbitech Co 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.

Pair Trading with Daehan Steel and Orbitech

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

The idea behind Daehan Steel and Orbitech 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.