Correlation Between Keyang Electric and Shin Steel
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and Shin Steel 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 Keyang Electric and Shin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and Shin Steel Co, you can compare the effects of market volatilities on Keyang Electric and Shin Steel 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 Keyang Electric with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Shin Steel.
Diversification Opportunities for Keyang Electric and Shin Steel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keyang and Shin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Keyang Electric i.e., Keyang Electric and Shin Steel go up and down completely randomly.
Pair Corralation between Keyang Electric and Shin Steel
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 0.59 times more return on investment than Shin Steel. However, Keyang Electric Machinery is 1.7 times less risky than Shin Steel. It trades about -0.03 of its potential returns per unit of risk. Shin Steel Co is currently generating about -0.03 per unit of risk. If you would invest 596,000 in Keyang Electric Machinery on November 7, 2024 and sell it today you would lose (206,000) from holding Keyang Electric Machinery or give up 34.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. Shin Steel Co
Performance |
| Timeline |
| Keyang Electric Machinery |
| Shin Steel |
Keyang Electric and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and Shin Steel
The main advantage of trading using opposite Keyang Electric and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, Shin Steel 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 Shin Steel will offset losses from the drop in Shin Steel's long position.| Keyang Electric vs. Nable Communications | Keyang Electric vs. Lotte Non Life Insurance | Keyang Electric vs. LG Display Co | Keyang Electric vs. Daishin Information Communications |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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