Correlation Between Ni Steel and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Ni Steel and Gyeongnam Steel 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 Ni Steel and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ni Steel and Gyeongnam Steel Co, you can compare the effects of market volatilities on Ni Steel and Gyeongnam Steel 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 Ni Steel with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ni Steel and Gyeongnam Steel.
Diversification Opportunities for Ni Steel and Gyeongnam Steel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 008260 and Gyeongnam is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ni Steel and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and Ni 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 Ni Steel are associated (or correlated) with Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Ni Steel i.e., Ni Steel and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Ni Steel and Gyeongnam Steel
Assuming the 90 days trading horizon Ni Steel is expected to under-perform the Gyeongnam Steel. In addition to that, Ni Steel is 1.14 times more volatile than Gyeongnam Steel Co. It trades about -0.06 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.01 per unit of volatility. If you would invest 302,000 in Gyeongnam Steel Co on August 27, 2024 and sell it today you would earn a total of 4,000 from holding Gyeongnam Steel Co or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ni Steel vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Ni Steel |
| Gyeongnam Steel |
Ni Steel and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ni Steel and Gyeongnam Steel
The main advantage of trading using opposite Ni Steel and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ni Steel position performs unexpectedly, Gyeongnam Steel 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.The idea behind Ni Steel and Gyeongnam Steel 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.| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Samhyun Steel 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 CEOs Directory module to screen CEOs from public companies around the world.
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