Correlation Between DSC Investment and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both DSC Investment and Hankuk 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 DSC Investment and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Hankuk Steel Wire, you can compare the effects of market volatilities on DSC Investment and Hankuk 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 DSC Investment with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Hankuk Steel.
Diversification Opportunities for DSC Investment and Hankuk Steel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DSC and Hankuk is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and DSC Investment 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 DSC Investment are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of DSC Investment i.e., DSC Investment and Hankuk Steel go up and down completely randomly.
Pair Corralation between DSC Investment and Hankuk Steel
Assuming the 90 days trading horizon DSC Investment is expected to generate 23.62 times less return on investment than Hankuk Steel. But when comparing it to its historical volatility, DSC Investment is 2.53 times less risky than Hankuk Steel. It trades about 0.03 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 287,000 in Hankuk Steel Wire on October 4, 2024 and sell it today you would earn a total of 114,000 from holding Hankuk Steel Wire or generate 39.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
DSC Investment vs. Hankuk Steel Wire
Performance |
Timeline |
DSC Investment |
Hankuk Steel Wire |
DSC Investment and Hankuk Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DSC Investment and Hankuk Steel
The main advantage of trading using opposite DSC Investment and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.DSC Investment vs. Nh Investment And | DSC Investment vs. Hanwha InvestmentSecurities Co | DSC Investment vs. Solution Advanced Technology | DSC Investment vs. Busan Industrial Co |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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