Correlation Between Gyeongnam Steel and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Hyundai Home 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 Hyundai Home 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 Hyundai Home Shopping, you can compare the effects of market volatilities on Gyeongnam Steel and Hyundai Home 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 Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Hyundai Home.
Diversification Opportunities for Gyeongnam Steel and Hyundai Home
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gyeongnam and Hyundai is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping 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 Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Hyundai Home go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Hyundai Home
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to under-perform the Hyundai Home. But the stock apears to be less risky and, when comparing its historical volatility, Gyeongnam Steel Co is 1.3 times less risky than Hyundai Home. The stock trades about -0.01 of its potential returns per unit of risk. The Hyundai Home Shopping is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,295,853 in Hyundai Home Shopping on September 2, 2024 and sell it today you would earn a total of 219,147 from holding Hyundai Home Shopping or generate 5.1% 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. Hyundai Home Shopping
Performance |
| Timeline |
| Gyeongnam Steel |
| Hyundai Home Shopping |
Gyeongnam Steel and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Hyundai Home
The main advantage of trading using opposite Gyeongnam Steel and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Hyundai Home 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 Hyundai Home will offset losses from the drop in Hyundai Home's long position.| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. Jeil Steel Mfg | Gyeongnam Steel vs. Wonil Special Steel |
| Hyundai Home vs. AptaBio Therapeutics | Hyundai Home vs. Daewoo SBI SPAC | Hyundai Home vs. Dream Security co | Hyundai Home vs. Microfriend |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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