Correlation Between Shinsegae Food and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Shinsegae Food and Nasmedia 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 Food and Nasmedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae Food and Nasmedia Co, you can compare the effects of market volatilities on Shinsegae Food and Nasmedia 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 Food with a short position of Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Food and Nasmedia.
Diversification Opportunities for Shinsegae Food and Nasmedia
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinsegae and Nasmedia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia and Shinsegae Food 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 Food are associated (or correlated) with Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and Nasmedia go up and down completely randomly.
Pair Corralation between Shinsegae Food and Nasmedia
Assuming the 90 days trading horizon Shinsegae Food is expected to generate 0.86 times more return on investment than Nasmedia. However, Shinsegae Food is 1.17 times less risky than Nasmedia. It trades about -0.13 of its potential returns per unit of risk. Nasmedia Co is currently generating about -0.16 per unit of risk. If you would invest 3,485,000 in Shinsegae Food on August 28, 2024 and sell it today you would lose (140,000) from holding Shinsegae Food or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae Food vs. Nasmedia Co
Performance |
| Timeline |
| Shinsegae Food |
| Nasmedia |
Shinsegae Food and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Food and Nasmedia
The main advantage of trading using opposite Shinsegae Food and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Food position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Shinsegae Food vs. Busan Industrial Co | Shinsegae Food vs. Busan Ind | Shinsegae Food vs. Mirae Asset Daewoo | Shinsegae Food vs. UNISEM Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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