Correlation Between UNISEM and Shinhan SOL
Can any of the company-specific risk be diversified away by investing in both UNISEM and Shinhan SOL 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 Shinhan SOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNISEM Co and Shinhan SOL KRX300, you can compare the effects of market volatilities on UNISEM and Shinhan SOL 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 Shinhan SOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and Shinhan SOL.
Diversification Opportunities for UNISEM and Shinhan SOL
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UNISEM and Shinhan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and Shinhan SOL KRX300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan SOL KRX300 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 Shinhan SOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan SOL KRX300 has no effect on the direction of UNISEM i.e., UNISEM and Shinhan SOL go up and down completely randomly.
Pair Corralation between UNISEM and Shinhan SOL
Assuming the 90 days trading horizon UNISEM Co is expected to generate 2.59 times more return on investment than Shinhan SOL. However, UNISEM is 2.59 times more volatile than Shinhan SOL KRX300. It trades about 0.3 of its potential returns per unit of risk. Shinhan SOL KRX300 is currently generating about 0.25 per unit of risk. If you would invest 585,863 in UNISEM Co on October 25, 2024 and sell it today you would earn a total of 81,137 from holding UNISEM Co or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNISEM Co vs. Shinhan SOL KRX300
Performance |
| Timeline |
| UNISEM |
| Shinhan SOL KRX300 |
UNISEM and Shinhan SOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNISEM and Shinhan SOL
The main advantage of trading using opposite UNISEM and Shinhan SOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNISEM position performs unexpectedly, Shinhan SOL 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 Shinhan SOL will offset losses from the drop in Shinhan SOL's long position.| UNISEM vs. SEOJEON ELECTRIC MACHINERY | UNISEM vs. Organic Special Pet | UNISEM vs. CJ Seafood Corp | UNISEM vs. Kyeryong Construction Industrial |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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