Correlation Between Shinil Industrial and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Shinil Industrial and Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical Co, you can compare the effects of market volatilities on Shinil Industrial and Dongnam Chemical 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 Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Industrial and Dongnam Chemical.
Diversification Opportunities for Shinil Industrial and Dongnam Chemical
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinil and Dongnam is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Industrial Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical 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 Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Shinil Industrial i.e., Shinil Industrial and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Shinil Industrial and Dongnam Chemical
Assuming the 90 days trading horizon Shinil Industrial Co is expected to generate 1.02 times more return on investment than Dongnam Chemical. However, Shinil Industrial is 1.02 times more volatile than Dongnam Chemical Co. It trades about -0.04 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.05 per unit of risk. If you would invest 195,647 in Shinil Industrial Co on October 14, 2024 and sell it today you would lose (52,947) from holding Shinil Industrial Co or give up 27.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinil Industrial Co vs. Dongnam Chemical Co
Performance |
| Timeline |
| Shinil Industrial |
| Dongnam Chemical |
Shinil Industrial and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinil Industrial and Dongnam Chemical
The main advantage of trading using opposite Shinil Industrial and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinil Industrial position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical'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 |
| Dongnam Chemical vs. Shinil Industrial Co | Dongnam Chemical vs. DRB Industrial Co | Dongnam Chemical vs. Seoyon Topmetal Co | Dongnam Chemical vs. Nh Investment And |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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