Correlation Between Gyeongnam Steel and Grand Korea
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Grand Korea 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 Grand Korea 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 Grand Korea Leisure, you can compare the effects of market volatilities on Gyeongnam Steel and Grand Korea 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 Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Grand Korea.
Diversification Opportunities for Gyeongnam Steel and Grand Korea
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gyeongnam and Grand is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure 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 Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Grand Korea go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Grand Korea
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 4.87 times more return on investment than Grand Korea. However, Gyeongnam Steel is 4.87 times more volatile than Grand Korea Leisure. It trades about 0.3 of its potential returns per unit of risk. Grand Korea Leisure is currently generating about -0.01 per unit of risk. If you would invest 303,000 in Gyeongnam Steel Co on September 26, 2024 and sell it today you would earn a total of 211,000 from holding Gyeongnam Steel Co or generate 69.64% 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. Grand Korea Leisure
Performance |
Timeline |
Gyeongnam Steel |
Grand Korea Leisure |
Gyeongnam Steel and Grand Korea Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gyeongnam Steel and Grand Korea
The main advantage of trading using opposite Gyeongnam Steel and Grand Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Grand Korea 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 Grand Korea will offset losses from the drop in Grand Korea's long position.Gyeongnam Steel vs. Shinsegae Food | Gyeongnam Steel vs. Semyung Electric Machinery | Gyeongnam Steel vs. Sungdo Engineering Construction | Gyeongnam Steel vs. Hyundai Green Food |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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