Correlation Between SIMMTECH and GS Engineering
Can any of the company-specific risk be diversified away by investing in both SIMMTECH 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 SIMMTECH and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and GS Engineering Construction, you can compare the effects of market volatilities on SIMMTECH 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 SIMMTECH with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and GS Engineering.
Diversification Opportunities for SIMMTECH and GS Engineering
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SIMMTECH and 006360 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co 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 SIMMTECH 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 SIMMTECH Co 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 SIMMTECH i.e., SIMMTECH and GS Engineering go up and down completely randomly.
Pair Corralation between SIMMTECH and GS Engineering
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the GS Engineering. In addition to that, SIMMTECH is 1.34 times more volatile than GS Engineering Construction. It trades about -0.02 of its total potential returns per unit of risk. GS Engineering Construction is currently generating about 0.0 per unit of volatility. If you would invest 2,225,000 in GS Engineering Construction on November 19, 2024 and sell it today you would lose (354,000) from holding GS Engineering Construction or give up 15.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. GS Engineering Construction
Performance |
| Timeline |
| SIMMTECH |
| GS Engineering Const |
SIMMTECH and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and GS Engineering
The main advantage of trading using opposite SIMMTECH and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH 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.| SIMMTECH vs. GS Engineering Construction | SIMMTECH vs. Hyunwoo Industrial Co | SIMMTECH vs. Dongil Metal Co | SIMMTECH vs. Daewoo Engineering Construction |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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