Correlation Between Dongil Metal and Samhyun Steel

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

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

Diversification Opportunities for Dongil Metal and Samhyun Steel

-0.26

Correlation Coefficient

Dongil Metal  Samhyun Steel

Very good diversification

The 3 months correlation between Dongil and Samhyun is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dongil Metal Co and Samhyun Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhyun Steel and Dongil Metal 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 Dongil Metal Co are associated (or correlated) with Samhyun Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhyun Steel has no effect on the direction of Dongil Metal i.e., Dongil Metal and Samhyun Steel go up and down completely randomly.

Pair Corralation between Dongil Metal and Samhyun Steel

Assuming the 90 days trading horizon Dongil Metal Co is expected to generate 2.36 times more return on investment than Samhyun Steel. However, Dongil Metal is 2.36 times more volatile than Samhyun Steel Co. It trades about 0.06 of its potential returns per unit of risk. Samhyun Steel Co is currently generating about -0.01 per unit of risk. If you would invest  763,000  in Dongil Metal Co on December 25, 2024 and sell it today you would earn a total of  50,000  from holding Dongil Metal Co or generate 6.55% return on investment over 90 days.

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

Dongil Metal Co  vs.  Samhyun Steel Co

Dongil Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongil Metal Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongil Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Samhyun Steel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dongil Metal and Samhyun Steel

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

The idea behind Dongil Metal Co and Samhyun Steel 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.