Correlation Between Shinsegae Food and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Shinsegae Food and Woorim Machinery 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 Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae Food and Woorim Machinery Co, you can compare the effects of market volatilities on Shinsegae Food and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Food and Woorim Machinery.
Diversification Opportunities for Shinsegae Food and Woorim Machinery
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinsegae and Woorim is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and Woorim Machinery go up and down completely randomly.
Pair Corralation between Shinsegae Food and Woorim Machinery
Assuming the 90 days trading horizon Shinsegae Food is expected to generate 0.42 times more return on investment than Woorim Machinery. However, Shinsegae Food is 2.4 times less risky than Woorim Machinery. It trades about -0.1 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.05 per unit of risk. If you would invest 3,870,000 in Shinsegae Food on September 3, 2024 and sell it today you would lose (720,000) from holding Shinsegae Food or give up 18.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae Food vs. Woorim Machinery Co
Performance |
| Timeline |
| Shinsegae Food |
| Woorim Machinery |
Shinsegae Food and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Food and Woorim Machinery
The main advantage of trading using opposite Shinsegae Food and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Food position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Shinsegae Food vs. Korea Real Estate | Shinsegae Food vs. Busan Industrial Co | Shinsegae Food vs. UNISEM Co | Shinsegae Food vs. RPBio Inc |
| Woorim Machinery vs. LG Display | Woorim Machinery vs. Hyundai Motor | Woorim Machinery vs. Hyundai Motor Co | Woorim Machinery vs. Hyundai Motor 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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