Correlation Between Korea New and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Korea New and GS Engineering 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 Korea New and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and GS Engineering Construction, you can compare the effects of market volatilities on Korea New and GS Engineering 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 Korea New with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and GS Engineering.
Diversification Opportunities for Korea New and GS Engineering
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and 006360 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const and Korea New 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 Korea New Network are associated (or correlated) with GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Korea New i.e., Korea New and GS Engineering go up and down completely randomly.
Pair Corralation between Korea New and GS Engineering
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the GS Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 1.67 times less risky than GS Engineering. The stock trades about -0.04 of its potential returns per unit of risk. The GS Engineering Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,514,000 in GS Engineering Construction on August 30, 2024 and sell it today you would earn a total of 446,000 from holding GS Engineering Construction or generate 29.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. GS Engineering Construction
Performance |
| Timeline |
| Korea New Network |
| GS Engineering Const |
Korea New and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and GS Engineering
The main advantage of trading using opposite Korea New and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.| Korea New vs. GS Engineering Construction | Korea New vs. Hankook Furniture Co | Korea New vs. WooDeumGee Farm Co, | Korea New vs. Shinhan Inverse Silver |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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