Correlation Between Korea Real and Shinsegae
Can any of the company-specific risk be diversified away by investing in both Korea Real and Shinsegae 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 Korea Real and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Shinsegae, you can compare the effects of market volatilities on Korea Real and Shinsegae 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 Korea Real with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Shinsegae.
Diversification Opportunities for Korea Real and Shinsegae
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Shinsegae is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and Korea Real 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 Korea Real Estate are associated (or correlated) with Shinsegae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae has no effect on the direction of Korea Real i.e., Korea Real and Shinsegae go up and down completely randomly.
Pair Corralation between Korea Real and Shinsegae
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.58 times more return on investment than Shinsegae. However, Korea Real Estate is 1.73 times less risky than Shinsegae. It trades about 0.01 of its potential returns per unit of risk. Shinsegae is currently generating about -0.09 per unit of risk. If you would invest 101,300 in Korea Real Estate on September 3, 2024 and sell it today you would earn a total of 1,100 from holding Korea Real Estate or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Shinsegae
Performance |
| Timeline |
| Korea Real Estate |
| Shinsegae |
Korea Real and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Shinsegae
The main advantage of trading using opposite Korea Real and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real position performs unexpectedly, Shinsegae 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 Shinsegae will offset losses from the drop in Shinsegae's long position.| Korea Real vs. Sejong Telecom | Korea Real vs. Mobileleader CoLtd | Korea Real vs. Lotte Data Communication | Korea Real vs. Wireless Power Amplifier |
| Shinsegae vs. Korea Real Estate | Shinsegae vs. Busan Industrial Co | Shinsegae vs. UNISEM Co | Shinsegae vs. RPBio Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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