Correlation Between DoubleU Games and Moonbae Steel

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

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

Diversification Opportunities for DoubleU Games and Moonbae Steel

-0.23

Correlation Coefficient

DoubleU Games  Moonbae Steel

Very good diversification

The 3 months correlation between DoubleU and Moonbae is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding DoubleU Games Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and DoubleU Games 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 DoubleU Games Co are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of DoubleU Games i.e., DoubleU Games and Moonbae Steel go up and down completely randomly.

Pair Corralation between DoubleU Games and Moonbae Steel

Assuming the 90 days trading horizon DoubleU Games Co is expected to under-perform the Moonbae Steel. But the stock apears to be less risky and, when comparing its historical volatility, DoubleU Games Co is 1.85 times less risky than Moonbae Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Moonbae Steel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  229,000  in Moonbae Steel on December 25, 2024 and sell it today you would earn a total of  22,000  from holding Moonbae Steel or generate 9.61% return on investment over 90 days.

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

DoubleU Games Co  vs.  Moonbae Steel

DoubleU Games

Risk-Adjusted Performance

Very Weak

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

Moonbae Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moonbae Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DoubleU Games and Moonbae Steel

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

The idea behind DoubleU Games Co and Moonbae Steel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.