Correlation Between Shinil Industrial and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Shinil Industrial and Songwon Industrial 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 Shinil Industrial and Songwon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinil Industrial Co and Songwon Industrial Co, you can compare the effects of market volatilities on Shinil Industrial and Songwon Industrial 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 Shinil Industrial with a short position of Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Industrial and Songwon Industrial.
Diversification Opportunities for Shinil Industrial and Songwon Industrial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinil and Songwon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Industrial Co and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial and Shinil Industrial 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 Shinil Industrial Co are associated (or correlated) with Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Shinil Industrial i.e., Shinil Industrial and Songwon Industrial go up and down completely randomly.
Pair Corralation between Shinil Industrial and Songwon Industrial
Assuming the 90 days trading horizon Shinil Industrial is expected to generate 22.9 times less return on investment than Songwon Industrial. But when comparing it to its historical volatility, Shinil Industrial Co is 2.38 times less risky than Songwon Industrial. It trades about 0.02 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,116,000 in Songwon Industrial Co on October 15, 2024 and sell it today you would earn a total of 115,000 from holding Songwon Industrial Co or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinil Industrial Co vs. Songwon Industrial Co
Performance |
| Timeline |
| Shinil Industrial |
| Songwon Industrial |
Shinil Industrial and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinil Industrial and Songwon Industrial
The main advantage of trading using opposite Shinil Industrial and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinil Industrial position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Shinil Industrial vs. Korean Air Lines | Shinil Industrial vs. Jeju Air Co | Shinil Industrial vs. Wireless Power Amplifier | Shinil Industrial vs. Tway Air Co |
| Songwon Industrial vs. Sung Bo Chemicals | Songwon Industrial vs. Daewon Chemical Co | Songwon Industrial vs. Youngbo Chemical Co | Songwon Industrial vs. TK Chemical |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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