Correlation Between Dong A and Shinsegae Food
Can any of the company-specific risk be diversified away by investing in both Dong A 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 Dong A and Shinsegae Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Eltek and Shinsegae Food, you can compare the effects of market volatilities on Dong A 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 Dong A with a short position of Shinsegae Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Shinsegae Food.
Diversification Opportunities for Dong A and Shinsegae Food
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dong and Shinsegae is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and Dong A 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 Dong A Eltek 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 Dong A i.e., Dong A and Shinsegae Food go up and down completely randomly.
Pair Corralation between Dong A and Shinsegae Food
Assuming the 90 days trading horizon Dong A Eltek is expected to generate 1.2 times more return on investment than Shinsegae Food. However, Dong A is 1.2 times more volatile than Shinsegae Food. It trades about 0.15 of its potential returns per unit of risk. Shinsegae Food is currently generating about 0.01 per unit of risk. If you would invest 329,000 in Dong A Eltek on November 27, 2024 and sell it today you would earn a total of 13,000 from holding Dong A Eltek or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Eltek vs. Shinsegae Food
Performance |
| Timeline |
| Dong A Eltek |
| Shinsegae Food |
Dong A and Shinsegae Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Shinsegae Food
The main advantage of trading using opposite Dong A and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A 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.The idea behind Dong A Eltek and Shinsegae Food 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 Food vs. Chorokbaem Healthcare Co | Shinsegae Food vs. Infinitt Healthcare Co | Shinsegae Food vs. Pureun Mutual Savings | Shinsegae Food vs. INFINITT Healthcare 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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