Correlation Between Jin Air and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Jin Air 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 Jin Air and Gyeongnam Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Gyeongnam Steel Co, you can compare the effects of market volatilities on Jin Air 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 Jin Air with a short position of Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Gyeongnam Steel.
Diversification Opportunities for Jin Air and Gyeongnam Steel
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jin and Gyeongnam is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air 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 Jin Air 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 Jin Air 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 Jin Air i.e., Jin Air and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Jin Air and Gyeongnam Steel
Assuming the 90 days trading horizon Jin Air Co is expected to under-perform the Gyeongnam Steel. But the stock apears to be less risky and, when comparing its historical volatility, Jin Air Co is 2.13 times less risky than Gyeongnam Steel. The stock trades about -0.08 of its potential returns per unit of risk. The Gyeongnam Steel Co is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 282,000 in Gyeongnam Steel Co on September 12, 2024 and sell it today you would earn a total of 175,000 from holding Gyeongnam Steel Co or generate 62.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jin Air Co vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Jin Air |
| Gyeongnam Steel |
Jin Air and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jin Air and Gyeongnam Steel
The main advantage of trading using opposite Jin Air and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air 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.| Jin Air vs. Air Busan Co | Jin Air vs. Tway Air Co | Jin Air vs. Solution Advanced Technology | Jin Air vs. Busan Industrial Co |
| Gyeongnam Steel vs. Keum Kang Steel | Gyeongnam Steel vs. PJ Metal Co | Gyeongnam Steel vs. Samhyun Steel Co | Gyeongnam Steel vs. Jeil Steel Mfg |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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