Correlation Between Korea Gas and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Gas 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 Gas 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 Gas and GS Engineering Construction, you can compare the effects of market volatilities on Korea Gas 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 Gas with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Gas and GS Engineering.
Diversification Opportunities for Korea Gas and GS Engineering
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and 006360 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Korea Gas 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 Gas 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 Gas 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 Gas i.e., Korea Gas and GS Engineering go up and down completely randomly.
Pair Corralation between Korea Gas and GS Engineering
Assuming the 90 days trading horizon Korea Gas is expected to generate 1.68 times more return on investment than GS Engineering. However, Korea Gas is 1.68 times more volatile than GS Engineering Construction. It trades about 0.19 of its potential returns per unit of risk. GS Engineering Construction is currently generating about 0.04 per unit of risk. If you would invest 4,095,000 in Korea Gas on August 27, 2024 and sell it today you would earn a total of 540,000 from holding Korea Gas or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Gas vs. GS Engineering Construction
Performance |
| Timeline |
| Korea Gas |
| GS Engineering Const |
Korea Gas and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Gas and GS Engineering
The main advantage of trading using opposite Korea Gas and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Gas 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 Gas vs. Daeduck Electronics Co | Korea Gas vs. Seoul Electronics Telecom | Korea Gas vs. Shinil Electronics Co | Korea Gas vs. ABCO Electronics Co |
| GS Engineering vs. Hanmi Semiconductor Co | GS Engineering vs. Netmarble Games Corp | GS Engineering vs. Kakao Games Corp | GS Engineering vs. Sam Yang Foods |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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