Correlation Between Jeil Steel and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Jeil 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 Jeil 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 Jeil Steel Mfg and Gyeongnam Steel Co, you can compare the effects of market volatilities on Jeil 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 Jeil Steel with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeil Steel and Gyeongnam Steel.
Diversification Opportunities for Jeil Steel and Gyeongnam Steel
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeil and Gyeongnam is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jeil Steel Mfg and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and Jeil 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 Jeil Steel Mfg 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 Jeil Steel i.e., Jeil Steel and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Jeil Steel and Gyeongnam Steel
Assuming the 90 days trading horizon Jeil Steel Mfg is expected to under-perform the Gyeongnam Steel. But the stock apears to be less risky and, when comparing its historical volatility, Jeil Steel Mfg is 3.89 times less risky than Gyeongnam Steel. The stock trades about -0.39 of its potential returns per unit of risk. The Gyeongnam Steel Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 520,000 in Gyeongnam Steel Co on November 6, 2024 and sell it today you would earn a total of 45,000 from holding Gyeongnam Steel Co or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeil Steel Mfg vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Jeil Steel Mfg |
| Gyeongnam Steel |
Jeil Steel and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeil Steel and Gyeongnam Steel
The main advantage of trading using opposite Jeil Steel and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeil 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.| Jeil Steel vs. Insung Information Co | Jeil Steel vs. Ssangyong Information Communication | Jeil Steel vs. Sam Yang Foods | Jeil Steel vs. Hyundai Green Food |
| Gyeongnam Steel vs. DB Financial Investment | Gyeongnam Steel vs. Mgame Corp | Gyeongnam Steel vs. Pureun Mutual Savings | Gyeongnam Steel vs. Sangsangin Investment Securities |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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