Correlation Between Korea Zinc and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Zinc and GS Engineering 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 Zinc and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Zinc and GS Engineering Construction, you can compare the effects of market volatilities on Korea Zinc and GS Engineering 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 Zinc with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and GS Engineering.
Diversification Opportunities for Korea Zinc and GS Engineering
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and 006360 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const and Korea Zinc 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 Zinc are associated (or correlated) with GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Korea Zinc i.e., Korea Zinc and GS Engineering go up and down completely randomly.
Pair Corralation between Korea Zinc and GS Engineering
Assuming the 90 days trading horizon Korea Zinc is expected to generate 1.61 times more return on investment than GS Engineering. However, Korea Zinc is 1.61 times more volatile than GS Engineering Construction. It trades about 0.29 of its potential returns per unit of risk. GS Engineering Construction is currently generating about 0.08 per unit of risk. If you would invest 68,800,000 in Korea Zinc on August 30, 2024 and sell it today you would earn a total of 31,200,000 from holding Korea Zinc or generate 45.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. GS Engineering Construction
Performance |
| Timeline |
| Korea Zinc |
| GS Engineering Const |
Korea Zinc and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and GS Engineering
The main advantage of trading using opposite Korea Zinc and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.| Korea Zinc vs. SM Entertainment Co | Korea Zinc vs. Hanjin Transportation Co | Korea Zinc vs. Digital Multimedia Technology | Korea Zinc vs. FNC Entertainment Co |
| GS Engineering vs. Taegu Broadcasting | GS Engineering vs. PH Tech Co | GS Engineering vs. Intellian Technologies | GS Engineering vs. Konan 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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