Correlation Between Daehan Steel and ITM Semiconductor

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

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

Diversification Opportunities for Daehan Steel and ITM Semiconductor

-0.62

Correlation Coefficient

Daehan Steel  ITM Semiconductor

Excellent diversification

The 3 months correlation between Daehan and ITM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor 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 ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of Daehan Steel i.e., Daehan Steel and ITM Semiconductor go up and down completely randomly.

Pair Corralation between Daehan Steel and ITM Semiconductor

Assuming the 90 days trading horizon Daehan Steel is expected to generate 0.68 times more return on investment than ITM Semiconductor. However, Daehan Steel is 1.46 times less risky than ITM Semiconductor. It trades about 0.13 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.13 per unit of risk. If you would invest  1,186,000  in Daehan Steel on October 8, 2024 and sell it today you would earn a total of  418,000  from holding Daehan Steel or generate 35.24% 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.  ITM Semiconductor 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.

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daehan Steel and ITM Semiconductor

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

The idea behind Daehan Steel and ITM Semiconductor 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.