Correlation Between Gyeongnam Steel and LB Investment
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on Gyeongnam Steel and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and LB Investment.
Diversification Opportunities for Gyeongnam Steel and LB Investment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gyeongnam and 309960 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and LB Investment go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and LB Investment
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 2.11 times more return on investment than LB Investment. However, Gyeongnam Steel is 2.11 times more volatile than LB Investment. It trades about 0.27 of its potential returns per unit of risk. LB Investment is currently generating about -0.22 per unit of risk. If you would invest 275,500 in Gyeongnam Steel Co on August 27, 2024 and sell it today you would earn a total of 30,500 from holding Gyeongnam Steel Co or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. LB Investment
Performance |
| Timeline |
| Gyeongnam Steel |
| LB Investment |
Gyeongnam Steel and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and LB Investment
The main advantage of trading using opposite Gyeongnam Steel and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. Tplex Co | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Samhyun Steel Co |
| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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