Correlation Between Gyeongnam Steel and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Tae Kyung 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 Gyeongnam Steel and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gyeongnam Steel Co and Tae Kyung Chemical, you can compare the effects of market volatilities on Gyeongnam Steel and Tae Kyung 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 Gyeongnam Steel with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Tae Kyung.
Diversification Opportunities for Gyeongnam Steel and Tae Kyung
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gyeongnam and Tae is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Gyeongnam 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 Gyeongnam Steel Co are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Tae Kyung go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Tae Kyung
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 0.73 times more return on investment than Tae Kyung. However, Gyeongnam Steel Co is 1.37 times less risky than Tae Kyung. It trades about 0.01 of its potential returns per unit of risk. Tae Kyung Chemical is currently generating about -0.03 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Tae Kyung Chemical
Performance |
| Timeline |
| Gyeongnam Steel |
| Tae Kyung Chemical |
Gyeongnam Steel and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Tae Kyung
The main advantage of trading using opposite Gyeongnam Steel and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Samhyun Steel Co |
| Tae Kyung vs. SK Chemicals Co | Tae Kyung vs. Hankuk Steel Wire | Tae Kyung vs. Dongbu Steel Co | Tae Kyung vs. Sung Bo Chemicals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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