Correlation Between Tuksu Engineering and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Tuksu Engineering 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 Tuksu Engineering and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tuksu Engineering ConstructionLtd and Gyeongnam Steel Co, you can compare the effects of market volatilities on Tuksu Engineering 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 Tuksu Engineering with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tuksu Engineering and Gyeongnam Steel.
Diversification Opportunities for Tuksu Engineering and Gyeongnam Steel
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tuksu and Gyeongnam is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tuksu Engineering Construction and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and Tuksu Engineering 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 Tuksu Engineering ConstructionLtd 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 Tuksu Engineering i.e., Tuksu Engineering and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Tuksu Engineering and Gyeongnam Steel
Assuming the 90 days trading horizon Tuksu Engineering is expected to generate 23.22 times less return on investment than Gyeongnam Steel. But when comparing it to its historical volatility, Tuksu Engineering ConstructionLtd is 2.65 times less risky than Gyeongnam Steel. It trades about 0.03 of its potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 273,473 in Gyeongnam Steel Co on October 1, 2024 and sell it today you would earn a total of 186,527 from holding Gyeongnam Steel Co or generate 68.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tuksu Engineering Construction vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Tuksu Engineering |
| Gyeongnam Steel |
Tuksu Engineering and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tuksu Engineering and Gyeongnam Steel
The main advantage of trading using opposite Tuksu Engineering and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tuksu Engineering 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.| Tuksu Engineering vs. MetaLabs Co | Tuksu Engineering vs. Samhwa Paint Industrial | Tuksu Engineering vs. PJ Metal Co | Tuksu Engineering vs. Cheryong Industrial CoLtd |
| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Jeil Steel Mfg |
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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