Correlation Between Shinsegae Engineering and Sangsangin Investment

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Can any of the company-specific risk be diversified away by investing in both Shinsegae Engineering and Sangsangin Investment 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 Engineering and Sangsangin Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae Engineering Construction and Sangsangin Investment Securities, you can compare the effects of market volatilities on Shinsegae Engineering and Sangsangin Investment 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 Engineering with a short position of Sangsangin Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Engineering and Sangsangin Investment.

Diversification Opportunities for Shinsegae Engineering and Sangsangin Investment

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Shinsegae and Sangsangin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Engineering Construc and Sangsangin Investment Securiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsangin Investment and Shinsegae Engineering 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 Engineering Construction are associated (or correlated) with Sangsangin Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsangin Investment has no effect on the direction of Shinsegae Engineering i.e., Shinsegae Engineering and Sangsangin Investment go up and down completely randomly.

Pair Corralation between Shinsegae Engineering and Sangsangin Investment

Assuming the 90 days trading horizon Shinsegae Engineering Construction is expected to generate 0.09 times more return on investment than Sangsangin Investment. However, Shinsegae Engineering Construction is 11.71 times less risky than Sangsangin Investment. It trades about -0.18 of its potential returns per unit of risk. Sangsangin Investment Securities is currently generating about -0.13 per unit of risk. If you would invest  1,816,000  in Shinsegae Engineering Construction on August 29, 2024 and sell it today you would lose (14,000) from holding Shinsegae Engineering Construction or give up 0.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.5%
ValuesDaily Returns

Shinsegae Engineering Construc  vs.  Sangsangin Investment Securiti

 Performance 
       Timeline  
Shinsegae Engineering 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Engineering Construction are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.
Sangsangin Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sangsangin Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shinsegae Engineering and Sangsangin Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shinsegae Engineering and Sangsangin Investment

The main advantage of trading using opposite Shinsegae Engineering and Sangsangin Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Engineering position performs unexpectedly, Sangsangin Investment 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 Sangsangin Investment will offset losses from the drop in Sangsangin Investment's long position.
The idea behind Shinsegae Engineering Construction and Sangsangin Investment Securities 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.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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