Correlation Between Korea Steel and Genic
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Genic 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 Korea Steel and Genic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and Genic Co, you can compare the effects of market volatilities on Korea Steel and Genic 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 Korea Steel with a short position of Genic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Genic.
Diversification Opportunities for Korea Steel and Genic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Genic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Genic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genic and Korea Steel 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 Korea Steel Co are associated (or correlated) with Genic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genic has no effect on the direction of Korea Steel i.e., Korea Steel and Genic go up and down completely randomly.
Pair Corralation between Korea Steel and Genic
Assuming the 90 days trading horizon Korea Steel Co is expected to under-perform the Genic. But the stock apears to be less risky and, when comparing its historical volatility, Korea Steel Co is 3.94 times less risky than Genic. The stock trades about -0.1 of its potential returns per unit of risk. The Genic Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,295,000 in Genic Co on October 30, 2024 and sell it today you would earn a total of 35,000 from holding Genic Co or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. Genic Co
Performance |
| Timeline |
| Korea Steel |
| Genic |
Korea Steel and Genic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and Genic
The main advantage of trading using opposite Korea Steel and Genic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Genic 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 Genic will offset losses from the drop in Genic's long position.| Korea Steel vs. Seah Steel Corp | Korea Steel vs. Ajusteel Co | Korea Steel vs. Ni Steel | Korea Steel vs. Samwon Steel |
| Genic vs. AeroSpace Technology of | Genic vs. Hankuk Steel Wire | Genic vs. Korea Steel Co | Genic vs. Dong A Steel Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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