Correlation Between UNISEM and Shinsegae
Can any of the company-specific risk be diversified away by investing in both UNISEM 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 UNISEM and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNISEM Co and Shinsegae, you can compare the effects of market volatilities on UNISEM 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 UNISEM with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and Shinsegae.
Diversification Opportunities for UNISEM and Shinsegae
Poor diversification
The 3 months correlation between UNISEM and Shinsegae is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and UNISEM 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 UNISEM Co 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 UNISEM i.e., UNISEM and Shinsegae go up and down completely randomly.
Pair Corralation between UNISEM and Shinsegae
Assuming the 90 days trading horizon UNISEM Co is expected to generate 1.14 times more return on investment than Shinsegae. However, UNISEM is 1.14 times more volatile than Shinsegae. It trades about -0.28 of its potential returns per unit of risk. Shinsegae is currently generating about -0.32 per unit of risk. If you would invest 684,000 in UNISEM Co on September 3, 2024 and sell it today you would lose (92,000) from holding UNISEM Co or give up 13.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNISEM Co vs. Shinsegae
Performance |
| Timeline |
| UNISEM |
| Shinsegae |
UNISEM and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNISEM and Shinsegae
The main advantage of trading using opposite UNISEM and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNISEM 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.The idea behind UNISEM Co and Shinsegae pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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