Correlation Between GS Retail and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both GS Retail and Dongbang Transport 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 Retail and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Retail Co and Dongbang Transport Logistics, you can compare the effects of market volatilities on GS Retail and Dongbang Transport 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 Retail with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and Dongbang Transport.
Diversification Opportunities for GS Retail and Dongbang Transport
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 007070 and Dongbang is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and GS Retail 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 Retail Co are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of GS Retail i.e., GS Retail and Dongbang Transport go up and down completely randomly.
Pair Corralation between GS Retail and Dongbang Transport
Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the Dongbang Transport. In addition to that, GS Retail is 1.08 times more volatile than Dongbang Transport Logistics. It trades about -0.16 of its total potential returns per unit of risk. Dongbang Transport Logistics is currently generating about -0.02 per unit of volatility. If you would invest 236,000 in Dongbang Transport Logistics on October 26, 2024 and sell it today you would lose (10,000) from holding Dongbang Transport Logistics or give up 4.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 72.13% |
Values | Daily Returns |
GS Retail Co vs. Dongbang Transport Logistics
Performance |
Timeline |
GS Retail |
Dongbang Transport |
GS Retail and Dongbang Transport Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GS Retail and Dongbang Transport
The main advantage of trading using opposite GS Retail and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.GS Retail vs. KB Financial Group | GS Retail vs. Shinhan Financial Group | GS Retail vs. Hana Financial | GS Retail vs. Woori Financial Group |
Dongbang Transport vs. KB Financial Group | Dongbang Transport vs. Shinhan Financial Group | Dongbang Transport vs. Hana Financial | Dongbang Transport vs. Woori Financial Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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