Correlation Between SH Energy and Innowireless
Can any of the company-specific risk be diversified away by investing in both SH Energy and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on SH Energy and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Innowireless.
Diversification Opportunities for SH Energy and Innowireless
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 002360 and Innowireless is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of SH Energy i.e., SH Energy and Innowireless go up and down completely randomly.
Pair Corralation between SH Energy and Innowireless
Assuming the 90 days trading horizon SH Energy is expected to generate 1.59 times less return on investment than Innowireless. In addition to that, SH Energy is 1.73 times more volatile than Innowireless Co. It trades about 0.06 of its total potential returns per unit of risk. Innowireless Co is currently generating about 0.17 per unit of volatility. If you would invest 1,736,000 in Innowireless Co on September 1, 2024 and sell it today you would earn a total of 128,000 from holding Innowireless Co or generate 7.37% 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. Innowireless Co
Performance |
| Timeline |
| SH Energy Chemical |
| Innowireless |
SH Energy and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Innowireless
The main advantage of trading using opposite SH Energy and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| SH Energy vs. Air Busan Co | SH Energy vs. Jeju Air Co | SH Energy vs. Cube Entertainment | SH Energy vs. MEDIANA CoLtd |
| Innowireless vs. LG Chemicals | Innowireless vs. Sung Bo Chemicals | Innowireless vs. Lotte Non Life Insurance | Innowireless vs. JC Chemical 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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