Correlation Between Shinsegae and Daewoo Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Shinsegae and Daewoo Shipbuilding 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 Shinsegae and Daewoo Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae and Daewoo Shipbuilding, you can compare the effects of market volatilities on Shinsegae and Daewoo Shipbuilding 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 Shinsegae with a short position of Daewoo Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae and Daewoo Shipbuilding.
Diversification Opportunities for Shinsegae and Daewoo Shipbuilding
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shinsegae and Daewoo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae and Daewoo Shipbuilding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Shipbuilding and Shinsegae 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 Shinsegae are associated (or correlated) with Daewoo Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Shipbuilding has no effect on the direction of Shinsegae i.e., Shinsegae and Daewoo Shipbuilding go up and down completely randomly.
Pair Corralation between Shinsegae and Daewoo Shipbuilding
Assuming the 90 days trading horizon Shinsegae is expected to under-perform the Daewoo Shipbuilding. But the stock apears to be less risky and, when comparing its historical volatility, Shinsegae is 3.88 times less risky than Daewoo Shipbuilding. The stock trades about -0.25 of its potential returns per unit of risk. The Daewoo Shipbuilding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,845,000 in Daewoo Shipbuilding on August 30, 2024 and sell it today you would earn a total of 795,000 from holding Daewoo Shipbuilding or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae vs. Daewoo Shipbuilding
Performance |
| Timeline |
| Shinsegae |
| Daewoo Shipbuilding |
Shinsegae and Daewoo Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae and Daewoo Shipbuilding
The main advantage of trading using opposite Shinsegae and Daewoo Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae position performs unexpectedly, Daewoo Shipbuilding 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 Daewoo Shipbuilding will offset losses from the drop in Daewoo Shipbuilding's long position.| Shinsegae vs. Hana Technology Co | Shinsegae vs. Hwangkum Steel Technology | Shinsegae vs. LG Household Healthcare | Shinsegae vs. iNtRON Biotechnology |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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