Correlation Between GS Retail and SeAH Besteel

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

By analyzing existing cross correlation between GS Retail Co and SeAH Besteel Corp, you can compare the effects of market volatilities on GS Retail and SeAH Besteel 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 Retail with a short position of SeAH Besteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and SeAH Besteel.

Diversification Opportunities for GS Retail and SeAH Besteel

0.41

Correlation Coefficient

GS Retail  SeAH Besteel

Very weak diversification

The 3 months correlation between 007070 and SeAH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and SeAH Besteel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeAH Besteel Corp and GS Retail 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 Retail Co are associated (or correlated) with SeAH Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeAH Besteel Corp has no effect on the direction of GS Retail i.e., GS Retail and SeAH Besteel go up and down completely randomly.

Pair Corralation between GS Retail and SeAH Besteel

Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the SeAH Besteel. But the stock apears to be less risky and, when comparing its historical volatility, GS Retail Co is 1.68 times less risky than SeAH Besteel. The stock trades about -0.04 of its potential returns per unit of risk. The SeAH Besteel Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,544,651  in SeAH Besteel Corp on October 23, 2024 and sell it today you would earn a total of  378,349  from holding SeAH Besteel Corp or generate 24.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.27%
Values	Daily Returns

GS Retail Co  vs.  SeAH Besteel Corp

GS Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GS Retail Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SeAH Besteel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GS Retail and SeAH Besteel

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

The idea behind GS Retail Co and SeAH Besteel Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.