Correlation Between Shinsegae Engineering and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both Shinsegae Engineering and InnoTherapy 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 InnoTherapy 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 InnoTherapy, you can compare the effects of market volatilities on Shinsegae Engineering and InnoTherapy 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 InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Engineering and InnoTherapy.
Diversification Opportunities for Shinsegae Engineering and InnoTherapy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinsegae and InnoTherapy is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Engineering Construc and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy 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 InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of Shinsegae Engineering i.e., Shinsegae Engineering and InnoTherapy go up and down completely randomly.
Pair Corralation between Shinsegae Engineering and InnoTherapy
Assuming the 90 days trading horizon Shinsegae Engineering is expected to generate 58.04 times less return on investment than InnoTherapy. But when comparing it to its historical volatility, Shinsegae Engineering Construction is 37.87 times less risky than InnoTherapy. It trades about 0.27 of its potential returns per unit of risk. InnoTherapy is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 833,000 in InnoTherapy on November 1, 2024 and sell it today you would earn a total of 140,000 from holding InnoTherapy or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae Engineering Construc vs. InnoTherapy
Performance |
| Timeline |
| Shinsegae Engineering |
| InnoTherapy |
Shinsegae Engineering and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Engineering and InnoTherapy
The main advantage of trading using opposite Shinsegae Engineering and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Engineering position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| Shinsegae Engineering vs. KB Financial Group | Shinsegae Engineering vs. Shinhan Financial Group | Shinsegae Engineering vs. Hana Financial | Shinsegae Engineering vs. Woori Financial Group |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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