Correlation Between DONGKUK STEEL and PLAYWITH

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

By analyzing existing cross correlation between DONGKUK STEEL MILL and PLAYWITH, you can compare the effects of market volatilities on DONGKUK STEEL and PLAYWITH 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 DONGKUK STEEL with a short position of PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of DONGKUK STEEL and PLAYWITH.

Diversification Opportunities for DONGKUK STEEL and PLAYWITH

0.44

Correlation Coefficient

DONGKUK STEEL  PLAYWITH

Very weak diversification

The 3 months correlation between DONGKUK and PLAYWITH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding DONGKUK STEEL MILL and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH and DONGKUK 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 DONGKUK STEEL MILL are associated (or correlated) with PLAYWITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWITH has no effect on the direction of DONGKUK STEEL i.e., DONGKUK STEEL and PLAYWITH go up and down completely randomly.

Pair Corralation between DONGKUK STEEL and PLAYWITH

Assuming the 90 days trading horizon DONGKUK STEEL MILL is expected to generate 1.32 times more return on investment than PLAYWITH. However, DONGKUK STEEL is 1.32 times more volatile than PLAYWITH. It trades about 0.21 of its potential returns per unit of risk. PLAYWITH is currently generating about 0.03 per unit of risk. If you would invest  899,679  in DONGKUK STEEL MILL on April 25, 2025 and sell it today you would earn a total of  317,321  from holding DONGKUK STEEL MILL or generate 35.27% return on investment over 90 days.

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

DONGKUK STEEL MILL  vs.  PLAYWITH

DONGKUK STEEL MILL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DONGKUK STEEL MILL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DONGKUK STEEL sustained solid returns over the last few months and may actually be approaching a breakup point.

PLAYWITH

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYWITH are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PLAYWITH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DONGKUK STEEL and PLAYWITH

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

The idea behind DONGKUK STEEL MILL and PLAYWITH 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.