Correlation Between Moonbae Steel and GS Retail

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

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

Diversification Opportunities for Moonbae Steel and GS Retail

-0.28

Correlation Coefficient

Moonbae Steel  GS Retail

Very good diversification

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

Pair Corralation between Moonbae Steel and GS Retail

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.85 times more return on investment than GS Retail. However, Moonbae Steel is 1.85 times more volatile than GS Retail Co. It trades about 0.06 of its potential returns per unit of risk. GS Retail Co is currently generating about -0.12 per unit of risk. 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

Moonbae Steel  vs.  GS Retail Co

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.

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.

Pair Trading with Moonbae Steel and GS Retail

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

The idea behind Moonbae Steel and GS Retail Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.