Correlation Between SH Energy and Korea Information
Can any of the company-specific risk be diversified away by investing in both SH Energy and Korea Information 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 SH Energy and Korea Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Korea Information Communications, you can compare the effects of market volatilities on SH Energy and Korea Information 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 SH Energy with a short position of Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Korea Information.
Diversification Opportunities for SH Energy and Korea Information
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 002360 and Korea is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and SH Energy 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 SH Energy Chemical are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of SH Energy i.e., SH Energy and Korea Information go up and down completely randomly.
Pair Corralation between SH Energy and Korea Information
Assuming the 90 days trading horizon SH Energy Chemical is expected to generate 3.68 times more return on investment than Korea Information. However, SH Energy is 3.68 times more volatile than Korea Information Communications. It trades about 0.09 of its potential returns per unit of risk. Korea Information Communications is currently generating about 0.06 per unit of risk. If you would invest 51,600 in SH Energy Chemical on August 25, 2024 and sell it today you would earn a total of 2,900 from holding SH Energy Chemical or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Korea Information Communicatio
Performance |
| Timeline |
| SH Energy Chemical |
| Korea Information |
SH Energy and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Korea Information
The main advantage of trading using opposite SH Energy and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| SH Energy vs. Korea Information Communications | SH Energy vs. Automobile Pc | SH Energy vs. Daiyang Metal Co | SH Energy vs. Mobile Appliance |
| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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