Correlation Between Automobile and Shinil Industrial
Can any of the company-specific risk be diversified away by investing in both Automobile and Shinil 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 Automobile and Shinil Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Shinil Industrial Co, you can compare the effects of market volatilities on Automobile and Shinil 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 Automobile with a short position of Shinil Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Shinil Industrial.
Diversification Opportunities for Automobile and Shinil Industrial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Automobile and Shinil is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Shinil Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Industrial and Automobile 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 Automobile Pc are associated (or correlated) with Shinil Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Industrial has no effect on the direction of Automobile i.e., Automobile and Shinil Industrial go up and down completely randomly.
Pair Corralation between Automobile and Shinil Industrial
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Shinil Industrial. In addition to that, Automobile is 4.74 times more volatile than Shinil Industrial Co. It trades about -0.27 of its total potential returns per unit of risk. Shinil Industrial Co is currently generating about -0.16 per unit of volatility. If you would invest 142,400 in Shinil Industrial Co on November 7, 2024 and sell it today you would lose (2,000) from holding Shinil Industrial Co or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Automobile Pc vs. Shinil Industrial Co
Performance |
| Timeline |
| Automobile Pc |
| Shinil Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Automobile and Shinil Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Shinil Industrial
The main advantage of trading using opposite Automobile and Shinil Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Shinil 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 Shinil Industrial will offset losses from the drop in Shinil Industrial's long position.The idea behind Automobile Pc and Shinil Industrial Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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