Correlation Between Gyeongnam Steel and Wireless Power
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel and Wireless Power 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 Wireless Power 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 Wireless Power Amplifier, you can compare the effects of market volatilities on Gyeongnam Steel and Wireless Power 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 Wireless Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Wireless Power.
Diversification Opportunities for Gyeongnam Steel and Wireless Power
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gyeongnam and Wireless is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Wireless Power Amplifier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless Power Amplifier 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 Wireless Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Power Amplifier has no effect on the direction of Gyeongnam Steel i.e., Gyeongnam Steel and Wireless Power go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Wireless Power
Assuming the 90 days trading horizon Gyeongnam Steel Co is expected to generate 0.72 times more return on investment than Wireless Power. However, Gyeongnam Steel Co is 1.39 times less risky than Wireless Power. It trades about 0.05 of its potential returns per unit of risk. Wireless Power Amplifier is currently generating about -0.01 per unit of risk. If you would invest 284,107 in Gyeongnam Steel Co on September 12, 2024 and sell it today you would earn a total of 172,893 from holding Gyeongnam Steel Co or generate 60.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Wireless Power Amplifier
Performance |
| Timeline |
| Gyeongnam Steel |
| Wireless Power Amplifier |
Gyeongnam Steel and Wireless Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Wireless Power
The main advantage of trading using opposite Gyeongnam Steel and Wireless Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel position performs unexpectedly, Wireless Power 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 Wireless Power will offset losses from the drop in Wireless Power'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 |
| Wireless Power vs. SK Chemicals Co | Wireless Power vs. Wave Electronics Co | Wireless Power vs. Cuckoo Electronics Co | Wireless Power vs. Sung Bo Chemicals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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