Correlation Between ASTORY CoLtd and Gyeongnam Steel

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

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

Diversification Opportunities for ASTORY CoLtd and Gyeongnam Steel

0.74

Correlation Coefficient

ASTORY CoLtd  Gyeongnam Steel

Poor diversification

The 3 months correlation between ASTORY and Gyeongnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ASTORY CoLtd and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and ASTORY CoLtd 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 ASTORY CoLtd 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 ASTORY CoLtd i.e., ASTORY CoLtd and Gyeongnam Steel go up and down completely randomly.

Pair Corralation between ASTORY CoLtd and Gyeongnam Steel

Assuming the 90 days trading horizon ASTORY CoLtd is expected to under-perform the Gyeongnam Steel. In addition to that, ASTORY CoLtd is 1.05 times more volatile than Gyeongnam Steel Co. It trades about -0.08 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	Significant
Accuracy	99.79%
Values	Daily Returns

ASTORY CoLtd  vs.  Gyeongnam Steel Co

ASTORY CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gyeongnam Steel

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gyeongnam Steel Co are ranked lower than 14 (%) 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.

Pair Trading with ASTORY CoLtd and Gyeongnam Steel

The main advantage of trading using opposite ASTORY CoLtd and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTORY CoLtd 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.

The idea behind ASTORY CoLtd and Gyeongnam Steel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.