Correlation Between Golden Bridge and Husteel
Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Husteel 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 Golden Bridge and Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and Husteel, you can compare the effects of market volatilities on Golden Bridge and Husteel 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 Golden Bridge with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Husteel.
Diversification Opportunities for Golden Bridge and Husteel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golden and Husteel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Golden Bridge i.e., Golden Bridge and Husteel go up and down completely randomly.
Pair Corralation between Golden Bridge and Husteel
Assuming the 90 days trading horizon Golden Bridge Investment is expected to under-perform the Husteel. But the stock apears to be less risky and, when comparing its historical volatility, Golden Bridge Investment is 1.26 times less risky than Husteel. The stock trades about -0.09 of its potential returns per unit of risk. The Husteel is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 477,050 in Husteel on September 12, 2024 and sell it today you would lose (103,550) from holding Husteel or give up 21.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Bridge Investment vs. Husteel
Performance |
| Timeline |
| Golden Bridge Investment |
| Husteel |
Golden Bridge and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Bridge and Husteel
The main advantage of trading using opposite Golden Bridge and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.| Golden Bridge vs. Samsung Electronics Co | Golden Bridge vs. Samsung Electronics Co | Golden Bridge vs. SK Hynix | Golden Bridge vs. POSCO Holdings |
| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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