Correlation Between NH Investment and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both NH Investment 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 NH Investment and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Investment Securities and Gyeongnam Steel Co, you can compare the effects of market volatilities on NH Investment 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 NH Investment with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Gyeongnam Steel.
Diversification Opportunities for NH Investment and Gyeongnam Steel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 005940 and Gyeongnam is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and NH Investment 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 NH Investment Securities 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 NH Investment i.e., NH Investment and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between NH Investment and Gyeongnam Steel
Assuming the 90 days trading horizon NH Investment is expected to generate 2.27 times less return on investment than Gyeongnam Steel. But when comparing it to its historical volatility, NH Investment Securities is 2.95 times less risky than Gyeongnam Steel. It trades about 0.09 of its potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 290,536 in Gyeongnam Steel Co on January 25, 2025 and sell it today you would earn a total of 344,464 from holding Gyeongnam Steel Co or generate 118.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Investment Securities vs. Gyeongnam Steel Co
Performance |
| Timeline |
| NH Investment Securities |
| Gyeongnam Steel |
NH Investment and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Gyeongnam Steel
The main advantage of trading using opposite NH Investment and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment 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.| NH Investment vs. AptaBio Therapeutics | NH Investment vs. Daewoo SBI SPAC | NH Investment vs. Dream Security co | NH Investment vs. Microfriend |
| Gyeongnam Steel vs. Samlip General Foods | Gyeongnam Steel vs. Worldex Industry Trading | Gyeongnam Steel vs. Wing Yip Food | Gyeongnam Steel vs. EBEST Investment Securities |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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