Correlation Between Gyeongnam Steel and Dawonsys CoLtd
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Dawonsys CoLtd 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 Gyeongnam Steel and Dawonsys CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gyeongnam Steel Co and Dawonsys CoLtd, you can compare the effects of market volatilities on Gyeongnam Steel and Dawonsys CoLtd 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 Gyeongnam Steel with a short position of Dawonsys CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Dawonsys CoLtd.
Diversification Opportunities for Gyeongnam Steel and Dawonsys CoLtd
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gyeongnam and Dawonsys is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Dawonsys CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawonsys CoLtd and Gyeongnam 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 Gyeongnam Steel Co are associated (or correlated) with Dawonsys CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawonsys CoLtd has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Dawonsys CoLtd go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Dawonsys CoLtd
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 2.29 times more return on investment than Dawonsys CoLtd. However, Gyeongnam Steel is 2.29 times more volatile than Dawonsys CoLtd. It trades about 0.21 of its potential returns per unit of risk. Dawonsys CoLtd is currently generating about -0.1 per unit of risk. If you would invest 277,500 in Gyeongnam Steel Co on September 23, 2024 and sell it today you would earn a total of 194,500 from holding Gyeongnam Steel Co or generate 70.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gyeongnam Steel Co vs. Dawonsys CoLtd
Performance |
Timeline |
Gyeongnam Steel |
Dawonsys CoLtd |
Gyeongnam Steel and Dawonsys CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gyeongnam Steel and Dawonsys CoLtd
The main advantage of trading using opposite Gyeongnam Steel and Dawonsys CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Dawonsys CoLtd 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 Dawonsys CoLtd will offset losses from the drop in Dawonsys CoLtd's long position.Gyeongnam Steel vs. Woori Technology Investment | Gyeongnam Steel vs. Stic Investments | Gyeongnam Steel vs. TS Investment Corp | Gyeongnam Steel vs. Mgame Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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