Correlation Between GS Retail and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both GS Retail and Daiyang Metal 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 Daiyang Metal 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 Daiyang Metal Co, you can compare the effects of market volatilities on GS Retail and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and Daiyang Metal.
Diversification Opportunities for GS Retail and Daiyang Metal
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 007070 and Daiyang is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of GS Retail i.e., GS Retail and Daiyang Metal go up and down completely randomly.
Pair Corralation between GS Retail and Daiyang Metal
Assuming the 90 days trading horizon GS Retail Co is expected to generate 0.61 times more return on investment than Daiyang Metal. However, GS Retail Co is 1.63 times less risky than Daiyang Metal. It trades about -0.1 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.07 per unit of risk. If you would invest 1,982,970 in GS Retail Co on November 3, 2024 and sell it today you would lose (452,970) from holding GS Retail Co or give up 22.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.34% |
| Values | Daily Returns |
GS Retail Co vs. Daiyang Metal Co
Performance |
| Timeline |
| GS Retail |
| Daiyang Metal |
GS Retail and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and Daiyang Metal
The main advantage of trading using opposite GS Retail and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.The idea behind GS Retail Co and Daiyang Metal Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daiyang Metal vs. Dongwoo Farm To | Daiyang Metal vs. Neungyule Education | Daiyang Metal vs. WONIK Materials CoLtd | Daiyang Metal vs. Hana Materials |
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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