Correlation Between GS Engineering and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both GS Engineering and Daewoo Engineering 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 Daewoo Engineering 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on GS Engineering and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and Daewoo Engineering.
Diversification Opportunities for GS Engineering and Daewoo Engineering
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 006360 and Daewoo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of GS Engineering i.e., GS Engineering and Daewoo Engineering go up and down completely randomly.
Pair Corralation between GS Engineering and Daewoo Engineering
Assuming the 90 days trading horizon GS Engineering Construction is expected to generate 1.2 times more return on investment than Daewoo Engineering. However, GS Engineering is 1.2 times more volatile than Daewoo Engineering Construction. It trades about 0.01 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.01 per unit of risk. If you would invest 1,938,240 in GS Engineering Construction on November 27, 2024 and sell it today you would lose (93,240) from holding GS Engineering Construction or give up 4.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Engineering Construction vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| GS Engineering Const |
| Daewoo Engineering |
GS Engineering and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Engineering and Daewoo Engineering
The main advantage of trading using opposite GS Engineering and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| GS Engineering vs. Korean Reinsurance Co | GS Engineering vs. Daechang Steel Co | GS Engineering vs. DataSolution | GS Engineering vs. Samsung Life Insurance |
| Daewoo Engineering vs. Bookook Steel | Daewoo Engineering vs. Hyundai BNG Steel | Daewoo Engineering vs. GAMEVIL | Daewoo Engineering vs. Netmarble Games 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 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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