Correlation Between Daehan Steel and Duksan Hi

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

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

Diversification Opportunities for Daehan Steel and Duksan Hi

-0.67

Correlation Coefficient

Daehan Steel  Duksan Hi

Excellent diversification

The 3 months correlation between Daehan and Duksan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel 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 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 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 Daehan Steel i.e., Daehan Steel and Duksan Hi go up and down completely randomly.

Pair Corralation between Daehan Steel and Duksan Hi

Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.64 times more return on investment than Duksan Hi. However, Daehan Steel is 1.55 times less risky than Duksan Hi. It trades about 0.18 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about -0.06 per unit of risk. If you would invest  1,351,000  in Daehan Steel on October 24, 2024 and sell it today you would earn a total of  311,000  from holding Daehan Steel or generate 23.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Daehan Steel  vs.  Duksan Hi Metal

Daehan Steel

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Steel are ranked lower than 14 (%) 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.

Duksan Hi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duksan Hi Metal 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 Duksan Hi

The main advantage of trading using opposite Daehan Steel and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Steel 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 Daehan Steel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.