Correlation Between Automobile and Shinsegae
Can any of the company-specific risk be diversified away by investing in both Automobile and Shinsegae 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 Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Shinsegae, you can compare the effects of market volatilities on Automobile and Shinsegae 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 Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Shinsegae.
Diversification Opportunities for Automobile and Shinsegae
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automobile and Shinsegae is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae 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 Shinsegae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae has no effect on the direction of Automobile i.e., Automobile and Shinsegae go up and down completely randomly.
Pair Corralation between Automobile and Shinsegae
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Shinsegae. In addition to that, Automobile is 2.29 times more volatile than Shinsegae. It trades about -0.18 of its total potential returns per unit of risk. Shinsegae is currently generating about 0.02 per unit of volatility. If you would invest 13,260,000 in Shinsegae on October 20, 2024 and sell it today you would earn a total of 50,000 from holding Shinsegae or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Shinsegae
Performance |
| Timeline |
| Automobile Pc |
| Shinsegae |
Automobile and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Shinsegae
The main advantage of trading using opposite Automobile and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Shinsegae 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 will offset losses from the drop in Shinsegae's long position.| Automobile vs. Shinsegae Food | Automobile vs. Coloray International Investment | Automobile vs. Haitai Confectionery Foods | Automobile vs. Nh Investment And |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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