Correlation Between Gyeongnam Steel and Wonil Special
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Wonil Special 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 Wonil Special 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 Wonil Special Steel, you can compare the effects of market volatilities on Gyeongnam Steel and Wonil Special 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 Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Wonil Special.
Diversification Opportunities for Gyeongnam Steel and Wonil Special
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gyeongnam and Wonil is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel 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 Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Wonil Special go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Wonil Special
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 1.63 times more return on investment than Wonil Special. However, Gyeongnam Steel is 1.63 times more volatile than Wonil Special Steel. It trades about 0.18 of its potential returns per unit of risk. Wonil Special Steel is currently generating about 0.02 per unit of risk. If you would invest 275,500 in Gyeongnam Steel Co on August 29, 2024 and sell it today you would earn a total of 21,000 from holding Gyeongnam Steel Co or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Wonil Special Steel
Performance |
| Timeline |
| Gyeongnam Steel |
| Wonil Special Steel |
Gyeongnam Steel and Wonil Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Wonil Special
The main advantage of trading using opposite Gyeongnam Steel and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Wonil Special 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 Wonil Special will offset losses from the drop in Wonil Special's long position.| Gyeongnam Steel vs. Sangsin Energy Display | Gyeongnam Steel vs. Dongbang Transport Logistics | Gyeongnam Steel vs. DB Insurance Co | Gyeongnam Steel vs. Digital Power Communications |
| Wonil Special vs. LG Chemicals | Wonil Special vs. Lotte Chemical Corp | Wonil Special vs. Hyundai Steel | Wonil Special vs. Seah Steel Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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