Correlation Between GS Engineering and Heungkuk Metaltech

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

By analyzing existing cross correlation between GS Engineering Construction and Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on GS Engineering and Heungkuk Metaltech 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 GS Engineering with a short position of Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and Heungkuk Metaltech.

Diversification Opportunities for GS Engineering and Heungkuk Metaltech

-0.09

Correlation Coefficient

GS Engineering  Heungkuk Metaltech

Good diversification

The 3 months correlation between 006360 and Heungkuk is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd and GS Engineering 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 GS Engineering Construction are associated (or correlated) with Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of GS Engineering i.e., GS Engineering and Heungkuk Metaltech go up and down completely randomly.

Pair Corralation between GS Engineering and Heungkuk Metaltech

Assuming the 90 days trading horizon GS Engineering Construction is expected to under-perform the Heungkuk Metaltech. But the stock apears to be less risky and, when comparing its historical volatility, GS Engineering Construction is 1.09 times less risky than Heungkuk Metaltech. The stock trades about -0.1 of its potential returns per unit of risk. The Heungkuk Metaltech CoLtd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  482,000  in Heungkuk Metaltech CoLtd on September 24, 2024 and sell it today you would earn a total of  38,000  from holding Heungkuk Metaltech CoLtd or generate 7.88% return on investment over 90 days.

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

GS Engineering Construction  vs.  Heungkuk Metaltech CoLtd

GS Engineering Const

Risk-Adjusted Performance

0 of 100

Very Weak

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

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GS Engineering and Heungkuk Metaltech

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

The idea behind GS Engineering Construction and Heungkuk Metaltech CoLtd 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.