Correlation Between GS Engineering and Korea Gas
Can any of the company-specific risk be diversified away by investing in both GS Engineering and Korea Gas 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 GS Engineering and Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Engineering Construction and Korea Gas, you can compare the effects of market volatilities on GS Engineering and Korea Gas 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 GS Engineering with a short position of Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and Korea Gas.
Diversification Opportunities for GS Engineering and Korea Gas
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 006360 and Korea is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas and GS Engineering 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 GS Engineering Construction are associated (or correlated) with Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of GS Engineering i.e., GS Engineering and Korea Gas go up and down completely randomly.
Pair Corralation between GS Engineering and Korea Gas
Assuming the 90 days trading horizon GS Engineering is expected to generate 8.23 times less return on investment than Korea Gas. But when comparing it to its historical volatility, GS Engineering Construction is 1.68 times less risky than Korea Gas. It trades about 0.04 of its potential returns per unit of risk. Korea Gas is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,095,000 in Korea Gas on August 27, 2024 and sell it today you would earn a total of 540,000 from holding Korea Gas or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Engineering Construction vs. Korea Gas
Performance |
| Timeline |
| GS Engineering Const |
| Korea Gas |
GS Engineering and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Engineering and Korea Gas
The main advantage of trading using opposite GS Engineering and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, Korea Gas 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 Korea Gas will offset losses from the drop in Korea Gas' long position.| GS Engineering vs. Hanmi Semiconductor Co | GS Engineering vs. Netmarble Games Corp | GS Engineering vs. Kakao Games Corp | GS Engineering vs. Sam Yang Foods |
| Korea Gas vs. Daeduck Electronics Co | Korea Gas vs. Seoul Electronics Telecom | Korea Gas vs. Shinil Electronics Co | Korea Gas vs. ABCO Electronics Co |
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 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.
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