Correlation Between Gyeongnam Steel and Finetechnix CoLtd

Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Finetechnix 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 Finetechnix 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 Finetechnix CoLtd, you can compare the effects of market volatilities on Gyeongnam Steel and Finetechnix 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 Finetechnix CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Finetechnix CoLtd.

Diversification Opportunities for Gyeongnam Steel and Finetechnix CoLtd

-0.16

Correlation Coefficient

Gyeongnam Steel  Finetechnix CoLtd

Good diversification

The 3 months correlation between Gyeongnam and Finetechnix is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Finetechnix CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finetechnix 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 Finetechnix CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finetechnix CoLtd has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Finetechnix CoLtd go up and down completely randomly.

Pair Corralation between Gyeongnam Steel and Finetechnix CoLtd

Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 1.38 times more return on investment than Finetechnix CoLtd. However, Gyeongnam Steel is 1.38 times more volatile than Finetechnix CoLtd. It trades about 0.23 of its potential returns per unit of risk. Finetechnix CoLtd is currently generating about 0.0 per unit of risk. If you would invest  269,086  in Gyeongnam Steel Co on October 12, 2024 and sell it today you would earn a total of  330,914  from holding Gyeongnam Steel Co or generate 122.98% return on investment over 90 days.

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

Gyeongnam Steel Co  vs.  Finetechnix CoLtd

Gyeongnam Steel

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gyeongnam Steel Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gyeongnam Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Finetechnix CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gyeongnam Steel and Finetechnix CoLtd

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

The idea behind Gyeongnam Steel Co and Finetechnix 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.