Correlation Between Gyeongnam Steel and Sang A
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Sang A 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 Sang A 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 Sang A Frontec CoLtd, you can compare the effects of market volatilities on Gyeongnam Steel and Sang A 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 Sang A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Sang A.
Diversification Opportunities for Gyeongnam Steel and Sang A
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gyeongnam and Sang is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Sang A Frontec CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sang A Frontec 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 Sang A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sang A Frontec has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Sang A go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Sang A
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 2.91 times more return on investment than Sang A. However, Gyeongnam Steel is 2.91 times more volatile than Sang A Frontec CoLtd. It trades about 0.25 of its potential returns per unit of risk. Sang A Frontec CoLtd is currently generating about 0.07 per unit of risk. If you would invest 307,500 in Gyeongnam Steel Co on September 22, 2024 and sell it today you would earn a total of 164,500 from holding Gyeongnam Steel Co or generate 53.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Sang A Frontec CoLtd
Performance |
| Timeline |
| Gyeongnam Steel |
| Sang A Frontec |
Gyeongnam Steel and Sang A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Sang A
The main advantage of trading using opposite Gyeongnam Steel and Sang A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Sang A 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 Sang A will offset losses from the drop in Sang A's long position.| Gyeongnam Steel vs. Mgame Corp | Gyeongnam Steel vs. Dongbang Ship Machinery | Gyeongnam Steel vs. Tuksu Engineering ConstructionLtd | Gyeongnam Steel vs. Korea Alcohol Industrial |
| Sang A vs. Pureun Mutual Savings | Sang A vs. Dgb Financial | Sang A vs. Jeju Bank | Sang A vs. Daishin Information Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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