Correlation Between Hanshin Construction and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and GS Engineering 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 Hanshin Construction and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and GS Engineering Construction, you can compare the effects of market volatilities on Hanshin Construction and GS Engineering 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 Hanshin Construction with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and GS Engineering.
Diversification Opportunities for Hanshin Construction and GS Engineering
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanshin and 006360 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and GS Engineering go up and down completely randomly.
Pair Corralation between Hanshin Construction and GS Engineering
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 0.63 times more return on investment than GS Engineering. However, Hanshin Construction Co is 1.58 times less risky than GS Engineering. It trades about -0.24 of its potential returns per unit of risk. GS Engineering Construction is currently generating about -0.18 per unit of risk. If you would invest 657,817 in Hanshin Construction Co on October 23, 2024 and sell it today you would lose (34,817) from holding Hanshin Construction Co or give up 5.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanshin Construction Co vs. GS Engineering Construction
Performance |
Timeline |
Hanshin Construction |
GS Engineering Const |
Hanshin Construction and GS Engineering Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanshin Construction and GS Engineering
The main advantage of trading using opposite Hanshin Construction and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.Hanshin Construction vs. DONGKUK TED METAL | Hanshin Construction vs. Daou Data Corp | Hanshin Construction vs. BGF Retail Co | Hanshin Construction vs. Kukil Metal 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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