Correlation Between ChipsMedia and Shin Steel
Can any of the company-specific risk be diversified away by investing in both ChipsMedia and Shin Steel 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 ChipsMedia and Shin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and Shin Steel Co, you can compare the effects of market volatilities on ChipsMedia and Shin Steel 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 ChipsMedia with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and Shin Steel.
Diversification Opportunities for ChipsMedia and Shin Steel
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ChipsMedia and Shin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and ChipsMedia 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 ChipsMedia are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of ChipsMedia i.e., ChipsMedia and Shin Steel go up and down completely randomly.
Pair Corralation between ChipsMedia and Shin Steel
Assuming the 90 days trading horizon ChipsMedia is expected to generate 1.33 times more return on investment than Shin Steel. However, ChipsMedia is 1.33 times more volatile than Shin Steel Co. It trades about 0.07 of its potential returns per unit of risk. Shin Steel Co is currently generating about -0.04 per unit of risk. If you would invest 1,356,000 in ChipsMedia on August 31, 2024 and sell it today you would earn a total of 52,000 from holding ChipsMedia or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ChipsMedia vs. Shin Steel Co
Performance |
| Timeline |
| ChipsMedia |
| Shin Steel |
ChipsMedia and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and Shin Steel
The main advantage of trading using opposite ChipsMedia and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia position performs unexpectedly, Shin Steel 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 Shin Steel will offset losses from the drop in Shin Steel's long position.| ChipsMedia vs. Kukil Metal Co | ChipsMedia vs. SH Energy Chemical | ChipsMedia vs. Daejung Chemicals Metals | ChipsMedia vs. LG Chemicals |
| Shin Steel vs. Miwon Chemical | Shin Steel vs. DONGKUK TED METAL | Shin Steel vs. Haitai Confectionery Foods | Shin Steel vs. Kukdo Chemical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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