Correlation Between Shinsegae Food and OptiPharm
Can any of the company-specific risk be diversified away by investing in both Shinsegae Food and OptiPharm 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 OptiPharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae Food and OptiPharm Co, you can compare the effects of market volatilities on Shinsegae Food and OptiPharm 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 OptiPharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Food and OptiPharm.
Diversification Opportunities for Shinsegae Food and OptiPharm
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shinsegae and OptiPharm is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and OptiPharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiPharm 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 OptiPharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiPharm has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and OptiPharm go up and down completely randomly.
Pair Corralation between Shinsegae Food and OptiPharm
Assuming the 90 days trading horizon Shinsegae Food is expected to generate 1.17 times more return on investment than OptiPharm. However, Shinsegae Food is 1.17 times more volatile than OptiPharm Co. It trades about -0.05 of its potential returns per unit of risk. OptiPharm Co is currently generating about -0.12 per unit of risk. If you would invest 3,857,742 in Shinsegae Food on September 14, 2024 and sell it today you would lose (722,742) from holding Shinsegae Food or give up 18.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.59% |
| Values | Daily Returns |
Shinsegae Food vs. OptiPharm Co
Performance |
| Timeline |
| Shinsegae Food |
| OptiPharm |
Shinsegae Food and OptiPharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Food and OptiPharm
The main advantage of trading using opposite Shinsegae Food and OptiPharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Food position performs unexpectedly, OptiPharm 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 OptiPharm will offset losses from the drop in OptiPharm's long position.| Shinsegae Food vs. Daou Data Corp | Shinsegae Food vs. Solution Advanced Technology | Shinsegae Food vs. Busan Industrial Co | Shinsegae Food vs. Busan Ind |
| OptiPharm vs. Seoul Broadcasting System | OptiPharm vs. INFINITT Healthcare Co | OptiPharm vs. DB Financial Investment | OptiPharm vs. LG Household Healthcare |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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