Correlation Between Shinsegae Information and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Shinsegae Information and Youngchang Chemical 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 Youngchang Chemical 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 Youngchang Chemical Co, you can compare the effects of market volatilities on Shinsegae Information and Youngchang Chemical 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 Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Information and Youngchang Chemical.
Diversification Opportunities for Shinsegae Information and Youngchang Chemical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinsegae and Youngchang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Information Communic and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang Chemical 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 Youngchang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngchang Chemical has no effect on the direction of Shinsegae Information i.e., Shinsegae Information and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Shinsegae Information and Youngchang Chemical
Assuming the 90 days trading horizon Shinsegae Information Communication is expected to generate 0.47 times more return on investment than Youngchang Chemical. However, Shinsegae Information Communication is 2.15 times less risky than Youngchang Chemical. It trades about -0.36 of its potential returns per unit of risk. Youngchang Chemical Co is currently generating about -0.3 per unit of risk. If you would invest 989,000 in Shinsegae Information Communication on September 4, 2024 and sell it today you would lose (110,000) from holding Shinsegae Information Communication or give up 11.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae Information Communic vs. Youngchang Chemical Co
Performance |
| Timeline |
| Shinsegae Information |
| Youngchang Chemical |
Shinsegae Information and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae Information and Youngchang Chemical
The main advantage of trading using opposite Shinsegae Information and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae Information position performs unexpectedly, Youngchang Chemical 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 Youngchang Chemical will offset losses from the drop in Youngchang Chemical's long position.| Shinsegae Information vs. DB Financial Investment | Shinsegae Information vs. Shinhan Financial Group | Shinsegae Information vs. Korean Reinsurance Co | Shinsegae Information vs. KakaoBank Corp |
| Youngchang Chemical vs. LG Chem | Youngchang Chemical vs. DukSan Neolux CoLtd | Youngchang Chemical vs. LIG ES SPAC | Youngchang Chemical vs. Sukgyung AT Co |
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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