Correlation Between GS Retail and Moonbae Steel

Can any of the company-specific risk be diversified away by investing in both GS Retail and Moonbae 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 GS Retail and Moonbae Steel 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 Moonbae Steel, you can compare the effects of market volatilities on GS Retail and Moonbae 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 GS Retail with a short position of Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and Moonbae Steel.

Diversification Opportunities for GS Retail and Moonbae Steel

-0.28

Correlation Coefficient

GS Retail  Moonbae Steel

Very good diversification

The 3 months correlation between 007070 and Moonbae is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of GS Retail i.e., GS Retail and Moonbae Steel go up and down completely randomly.

Pair Corralation between GS Retail and Moonbae Steel

Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the Moonbae Steel. But the stock apears to be less risky and, when comparing its historical volatility, GS Retail Co is 1.85 times less risky than Moonbae Steel. The stock trades about -0.12 of its potential returns per unit of risk. The Moonbae Steel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  229,000  in Moonbae Steel on December 25, 2024 and sell it today you would earn a total of  17,500  from holding Moonbae Steel or generate 7.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

GS Retail Co  vs.  Moonbae Steel

GS Retail

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Moonbae Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moonbae Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GS Retail and Moonbae Steel

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

The idea behind GS Retail Co and Moonbae Steel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.