Correlation Between GS Engineering and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both GS Engineering and Nam Hwa 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 Nam Hwa 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 Nam Hwa Construction, you can compare the effects of market volatilities on GS Engineering and Nam Hwa 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 Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and Nam Hwa.
Diversification Opportunities for GS Engineering and Nam Hwa
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between 006360 and Nam is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction 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 Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of GS Engineering i.e., GS Engineering and Nam Hwa go up and down completely randomly.
Pair Corralation between GS Engineering and Nam Hwa
Assuming the 90 days trading horizon GS Engineering Construction is expected to generate 1.19 times more return on investment than Nam Hwa. However, GS Engineering is 1.19 times more volatile than Nam Hwa Construction. It trades about 0.08 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.05 per unit of risk. If you would invest 1,494,000 in GS Engineering Construction on September 3, 2024 and sell it today you would earn a total of 454,000 from holding GS Engineering Construction or generate 30.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Engineering Construction vs. Nam Hwa Construction
Performance |
| Timeline |
| GS Engineering Const |
| Nam Hwa Construction |
GS Engineering and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Engineering and Nam Hwa
The main advantage of trading using opposite GS Engineering and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| GS Engineering vs. AptaBio Therapeutics | GS Engineering vs. Daewoo SBI SPAC | GS Engineering vs. Dream Security co | GS Engineering vs. Microfriend |
| Nam Hwa vs. LG Display | Nam Hwa vs. Hyundai Motor | Nam Hwa vs. Hyundai Motor Co | Nam Hwa vs. Hyundai Motor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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