Correlation Between Gyeongnam Steel and Jin Air
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Jin Air 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 Jin Air 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 Jin Air Co, you can compare the effects of market volatilities on Gyeongnam Steel and Jin Air 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 Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Jin Air.
Diversification Opportunities for Gyeongnam Steel and Jin Air
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gyeongnam and Jin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Jin Air go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Jin Air
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 2.13 times more return on investment than Jin Air. However, Gyeongnam Steel is 2.13 times more volatile than Jin Air Co. It trades about 0.3 of its potential returns per unit of risk. Jin Air Co is currently generating about -0.08 per unit of risk. If you would invest 282,000 in Gyeongnam Steel Co on September 12, 2024 and sell it today you would earn a total of 175,000 from holding Gyeongnam Steel Co or generate 62.06% 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. Jin Air Co
Performance |
| Timeline |
| Gyeongnam Steel |
| Jin Air |
Gyeongnam Steel and Jin Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Jin Air
The main advantage of trading using opposite Gyeongnam Steel and Jin Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Jin Air 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 Jin Air will offset losses from the drop in Jin Air's long position.| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Samhyun Steel Co | Gyeongnam Steel vs. Jeil Steel Mfg |
| Jin Air vs. Air Busan Co | Jin Air vs. Tway Air Co | Jin Air vs. Solution Advanced Technology | Jin Air vs. Busan Industrial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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