Correlation Between GS Retail and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both GS Retail and Hanshin Construction 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 Hanshin Construction 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 Hanshin Construction Co, you can compare the effects of market volatilities on GS Retail and Hanshin Construction 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 Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and Hanshin Construction.
Diversification Opportunities for GS Retail and Hanshin Construction
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 007070 and Hanshin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction 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 Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of GS Retail i.e., GS Retail and Hanshin Construction go up and down completely randomly.
Pair Corralation between GS Retail and Hanshin Construction
Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the Hanshin Construction. But the stock apears to be less risky and, when comparing its historical volatility, GS Retail Co is 1.03 times less risky than Hanshin Construction. The stock trades about -0.06 of its potential returns per unit of risk. The Hanshin Construction Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 844,855 in Hanshin Construction Co on November 7, 2024 and sell it today you would lose (240,855) from holding Hanshin Construction Co or give up 28.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.44% |
| Values | Daily Returns |
GS Retail Co vs. Hanshin Construction Co
Performance |
| Timeline |
| GS Retail |
| Hanshin Construction |
GS Retail and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and Hanshin Construction
The main advantage of trading using opposite GS Retail and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| GS Retail vs. AptaBio Therapeutics | GS Retail vs. Daewoo SBI SPAC | GS Retail vs. Dream Security co | GS Retail vs. Microfriend |
| Hanshin Construction vs. CKH Food Health | Hanshin Construction vs. Woori Technology | Hanshin Construction vs. Foodnamoo | Hanshin Construction vs. NewFlex Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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