Correlation Between Shinsegae Information and Hwaseung Industries
Can any of the company-specific risk be diversified away by investing in both Shinsegae Information and Hwaseung Industries 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 Information and Hwaseung Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae Information Communication and Hwaseung Industries Co, you can compare the effects of market volatilities on Shinsegae Information and Hwaseung Industries 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 Information with a short position of Hwaseung Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Information and Hwaseung Industries.
Diversification Opportunities for Shinsegae Information and Hwaseung Industries
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinsegae and Hwaseung is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Information Communic and Hwaseung Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwaseung Industries and Shinsegae Information 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 Information Communication are associated (or correlated) with Hwaseung Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwaseung Industries has no effect on the direction of Shinsegae Information i.e., Shinsegae Information and Hwaseung Industries go up and down completely randomly.
Pair Corralation between Shinsegae Information and Hwaseung Industries
Assuming the 90 days trading horizon Shinsegae Information Communication is expected to under-perform the Hwaseung Industries. But the stock apears to be less risky and, when comparing its historical volatility, Shinsegae Information Communication is 1.05 times less risky than Hwaseung Industries. The stock trades about -0.22 of its potential returns per unit of risk. The Hwaseung Industries Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 411,500 in Hwaseung Industries Co on August 30, 2024 and sell it today you would earn a total of 7,000 from holding Hwaseung Industries Co or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae Information Communic vs. Hwaseung Industries Co
Performance |
| Timeline |
| Shinsegae Information |
| Hwaseung Industries |
Shinsegae Information and Hwaseung Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Information and Hwaseung Industries
The main advantage of trading using opposite Shinsegae Information and Hwaseung Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Information position performs unexpectedly, Hwaseung Industries 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 Hwaseung Industries will offset losses from the drop in Hwaseung Industries' long position.| Shinsegae Information vs. AptaBio Therapeutics | Shinsegae Information vs. Daewoo SBI SPAC | Shinsegae Information vs. Dream Security co | Shinsegae Information vs. Microfriend |
| Hwaseung Industries vs. Bohae Brewery | Hwaseung Industries vs. Ssangyong Information Communication | Hwaseung Industries vs. LB Investment | Hwaseung Industries vs. Shinsegae Information Communication |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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