Correlation Between System and SH Energy
Can any of the company-specific risk be diversified away by investing in both System and SH Energy 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 System and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and SH Energy Chemical, you can compare the effects of market volatilities on System and SH Energy 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 System with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and SH Energy.
Diversification Opportunities for System and SH Energy
Good diversification
The 3 months correlation between System and 002360 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and System 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 System and Application are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of System i.e., System and SH Energy go up and down completely randomly.
Pair Corralation between System and SH Energy
Assuming the 90 days trading horizon System and Application is expected to generate 1.15 times more return on investment than SH Energy. However, System is 1.15 times more volatile than SH Energy Chemical. It trades about -0.02 of its potential returns per unit of risk. SH Energy Chemical is currently generating about -0.03 per unit of risk. If you would invest 211,676 in System and Application on September 5, 2024 and sell it today you would lose (73,376) from holding System and Application or give up 34.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. SH Energy Chemical
Performance |
| Timeline |
| System and Application |
| SH Energy Chemical |
System and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and SH Energy
The main advantage of trading using opposite System and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| System vs. Dongsin Engineering Construction | System vs. Doosan Fuel Cell | System vs. Daishin Balance 1 | System vs. Total Soft Bank |
| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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