Correlation Between GS Engineering and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both GS Engineering and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on GS Engineering and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and Seoam Machinery.
Diversification Opportunities for GS Engineering and Seoam Machinery
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 006360 and Seoam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of GS Engineering i.e., GS Engineering and Seoam Machinery go up and down completely randomly.
Pair Corralation between GS Engineering and Seoam Machinery
Assuming the 90 days trading horizon GS Engineering Construction is expected to generate 0.86 times more return on investment than Seoam Machinery. However, GS Engineering Construction is 1.16 times less risky than Seoam Machinery. It trades about 0.18 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.13 per unit of risk. If you would invest 1,827,000 in GS Engineering Construction on August 29, 2024 and sell it today you would earn a total of 151,000 from holding GS Engineering Construction or generate 8.26% 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. Seoam Machinery Industry
Performance |
| Timeline |
| GS Engineering Const |
| Seoam Machinery Industry |
GS Engineering and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Engineering and Seoam Machinery
The main advantage of trading using opposite GS Engineering and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| GS Engineering vs. AptaBio Therapeutics | GS Engineering vs. Daewoo SBI SPAC | GS Engineering vs. Dream Security co | GS Engineering vs. Microfriend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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