Correlation Between Hanshin Construction and Shinsegae Engineering
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Shinsegae Engineering 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 Hanshin Construction and Shinsegae Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Shinsegae Engineering Construction, you can compare the effects of market volatilities on Hanshin Construction and Shinsegae Engineering 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 Hanshin Construction with a short position of Shinsegae Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Shinsegae Engineering.
Diversification Opportunities for Hanshin Construction and Shinsegae Engineering
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanshin and Shinsegae is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Shinsegae Engineering go up and down completely randomly.
Pair Corralation between Hanshin Construction and Shinsegae Engineering
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Shinsegae Engineering. In addition to that, Hanshin Construction is 17.66 times more volatile than Shinsegae Engineering Construction. It trades about -0.26 of its total potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about 0.28 per unit of volatility. If you would invest 1,811,000 in Shinsegae Engineering Construction on November 4, 2024 and sell it today you would earn a total of 5,000 from holding Shinsegae Engineering Construction or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Hanshin Construction Co vs. Shinsegae Engineering Construc
Performance |
| Timeline |
| Hanshin Construction |
| Shinsegae Engineering |
Hanshin Construction and Shinsegae Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Shinsegae Engineering
The main advantage of trading using opposite Hanshin Construction and Shinsegae Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Shinsegae Engineering 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 Shinsegae Engineering will offset losses from the drop in Shinsegae Engineering's long position.| Hanshin Construction vs. DB Financial Investment | Hanshin Construction vs. Korea Information Engineering | Hanshin Construction vs. Insung Information Co | Hanshin Construction vs. Samyung Trading Co |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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