Correlation Between I-Components and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both I-Components and Gyeongnam 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 I-Components and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i Components Co and Gyeongnam Steel Co, you can compare the effects of market volatilities on I-Components and Gyeongnam 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 I-Components with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Gyeongnam Steel.
Diversification Opportunities for I-Components and Gyeongnam Steel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between I-Components and Gyeongnam is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and I-Components 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 i Components Co are associated (or correlated) with Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of I-Components i.e., I-Components and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between I-Components and Gyeongnam Steel
Assuming the 90 days trading horizon i Components Co is expected to under-perform the Gyeongnam Steel. In addition to that, I-Components is 1.15 times more volatile than Gyeongnam Steel Co. It trades about -0.02 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.06 per unit of volatility. If you would invest 278,808 in Gyeongnam Steel Co on September 26, 2024 and sell it today you would earn a total of 235,192 from holding Gyeongnam Steel Co or generate 84.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
i Components Co vs. Gyeongnam Steel Co
Performance |
Timeline |
i Components |
Gyeongnam Steel |
I-Components and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with I-Components and Gyeongnam Steel
The main advantage of trading using opposite I-Components and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, Gyeongnam 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.I-Components vs. Samsung Electronics Co | I-Components vs. Samsung Electronics Co | I-Components vs. LG Energy Solution | I-Components vs. SK Hynix |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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