Correlation Between Haitai Confectionery and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery 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 Haitai Confectionery and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and GS Engineering Construction, you can compare the effects of market volatilities on Haitai Confectionery 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 Haitai Confectionery with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and GS Engineering.
Diversification Opportunities for Haitai Confectionery and GS Engineering
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Haitai and 006360 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods 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 Haitai Confectionery 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 Haitai Confectionery Foods 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 Haitai Confectionery i.e., Haitai Confectionery and GS Engineering go up and down completely randomly.
Pair Corralation between Haitai Confectionery and GS Engineering
Assuming the 90 days trading horizon Haitai Confectionery is expected to generate 1.33 times less return on investment than GS Engineering. But when comparing it to its historical volatility, Haitai Confectionery Foods is 1.67 times less risky than GS Engineering. It trades about 0.22 of its potential returns per unit of risk. GS Engineering Construction is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,726,000 in GS Engineering Construction on November 27, 2024 and sell it today you would earn a total of 119,000 from holding GS Engineering Construction or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. GS Engineering Construction
Performance |
| Timeline |
| Haitai Confectionery |
| GS Engineering Const |
Haitai Confectionery and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and GS Engineering
The main advantage of trading using opposite Haitai Confectionery and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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.The idea behind Haitai Confectionery Foods and GS Engineering Construction 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.
| GS Engineering vs. Korean Reinsurance Co | GS Engineering vs. Daechang Steel Co | GS Engineering vs. DataSolution | GS Engineering vs. Samsung Life Insurance |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |