Correlation Between Gyeongnam Steel and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Ecoplastic 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 Ecoplastic 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 Ecoplastic, you can compare the effects of market volatilities on Gyeongnam Steel and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Ecoplastic.
Diversification Opportunities for Gyeongnam Steel and Ecoplastic
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gyeongnam and Ecoplastic is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Ecoplastic go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Ecoplastic
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 1.06 times more return on investment than Ecoplastic. However, Gyeongnam Steel is 1.06 times more volatile than Ecoplastic. It trades about 0.18 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.23 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Ecoplastic
Performance |
| Timeline |
| Gyeongnam Steel |
| Ecoplastic |
Gyeongnam Steel and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Ecoplastic
The main advantage of trading using opposite Gyeongnam Steel and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic'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 |
| Ecoplastic vs. Busan Industrial Co | Ecoplastic vs. Busan Ind | Ecoplastic vs. Mirae Asset Daewoo | Ecoplastic vs. UNISEM Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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