Correlation Between SCI Information and Shinsegae Food
Can any of the company-specific risk be diversified away by investing in both SCI Information and Shinsegae Food 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 SCI Information and Shinsegae Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and Shinsegae Food, you can compare the effects of market volatilities on SCI Information and Shinsegae Food 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 SCI Information with a short position of Shinsegae Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and Shinsegae Food.
Diversification Opportunities for SCI Information and Shinsegae Food
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCI and Shinsegae is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and SCI 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 SCI Information Service are associated (or correlated) with Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of SCI Information i.e., SCI Information and Shinsegae Food go up and down completely randomly.
Pair Corralation between SCI Information and Shinsegae Food
Assuming the 90 days trading horizon SCI Information Service is expected to generate 0.54 times more return on investment than Shinsegae Food. However, SCI Information Service is 1.85 times less risky than Shinsegae Food. It trades about -0.02 of its potential returns per unit of risk. Shinsegae Food is currently generating about -0.03 per unit of risk. If you would invest 237,000 in SCI Information Service on November 6, 2024 and sell it today you would lose (9,000) from holding SCI Information Service or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. Shinsegae Food
Performance |
| Timeline |
| SCI Information Service |
| Shinsegae Food |
SCI Information and Shinsegae Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and Shinsegae Food
The main advantage of trading using opposite SCI Information and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, Shinsegae Food 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 Food will offset losses from the drop in Shinsegae Food's long position.| SCI Information vs. Hankukpackage Co | SCI Information vs. Daesung Hi Tech Co | SCI Information vs. Innowireless Co | SCI Information vs. LG Household Healthcare |
| Shinsegae Food vs. Daejoo Electronic Materials | Shinsegae Food vs. Jahwa Electronics Co | Shinsegae Food vs. UJU Electronics Co | Shinsegae Food vs. Lotte Chilsung Beverage |
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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