Correlation Between Tplex and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Tplex and Gyeongnam Steel 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 Tplex and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tplex Co and Gyeongnam Steel Co, you can compare the effects of market volatilities on Tplex and Gyeongnam Steel 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 Tplex with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tplex and Gyeongnam Steel.
Diversification Opportunities for Tplex and Gyeongnam Steel
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tplex and Gyeongnam is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tplex Co and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel and Tplex 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 Tplex Co are associated (or correlated) with Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Tplex i.e., Tplex and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Tplex and Gyeongnam Steel
Assuming the 90 days trading horizon Tplex Co is expected to under-perform the Gyeongnam Steel. In addition to that, Tplex is 1.62 times more volatile than Gyeongnam Steel Co. It trades about -0.08 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.18 per unit of volatility. If you would invest 275,500 in Gyeongnam Steel Co on August 29, 2024 and sell it today you would earn a total of 21,000 from holding Gyeongnam Steel Co or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tplex Co vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Tplex |
| Gyeongnam Steel |
Tplex and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tplex and Gyeongnam Steel
The main advantage of trading using opposite Tplex and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tplex position performs unexpectedly, Gyeongnam Steel 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.The idea behind Tplex Co and Gyeongnam Steel Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gyeongnam Steel vs. Sangsin Energy Display | Gyeongnam Steel vs. Dongbang Transport Logistics | Gyeongnam Steel vs. DB Insurance Co | Gyeongnam Steel vs. Digital Power 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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