Correlation Between Shin Steel and Korea Real
Can any of the company-specific risk be diversified away by investing in both Shin Steel and Korea Real 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 Shin Steel and Korea Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Steel Co and Korea Real Estate, you can compare the effects of market volatilities on Shin Steel and Korea Real 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 Shin Steel with a short position of Korea Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and Korea Real.
Diversification Opportunities for Shin Steel and Korea Real
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin and Korea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate and Shin Steel 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 Shin Steel Co are associated (or correlated) with Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of Shin Steel i.e., Shin Steel and Korea Real go up and down completely randomly.
Pair Corralation between Shin Steel and Korea Real
Assuming the 90 days trading horizon Shin Steel Co is expected to generate 3.92 times more return on investment than Korea Real. However, Shin Steel is 3.92 times more volatile than Korea Real Estate. It trades about 0.0 of its potential returns per unit of risk. Korea Real Estate is currently generating about -0.02 per unit of risk. If you would invest 297,068 in Shin Steel Co on September 1, 2024 and sell it today you would lose (48,068) from holding Shin Steel Co or give up 16.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Shin Steel Co vs. Korea Real Estate
Performance |
| Timeline |
| Shin Steel |
| Korea Real Estate |
Shin Steel and Korea Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and Korea Real
The main advantage of trading using opposite Shin Steel and Korea Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel position performs unexpectedly, Korea Real 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 Korea Real will offset losses from the drop in Korea Real's long position.| Shin Steel vs. Samsung Electronics Co | Shin Steel vs. Samsung Electronics Co | Shin Steel vs. LG Energy Solution | Shin Steel vs. SK Hynix |
| Korea Real vs. DataSolution | Korea Real vs. CJ Seafood Corp | Korea Real vs. Shinsegae Information Communication | Korea Real vs. Sungdo Engineering Construction |
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 Stocks Directory module to find actively traded stocks across global markets.
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