Correlation Between Shin Steel and ED
Can any of the company-specific risk be diversified away by investing in both Shin Steel and ED 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 ED 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 ED Co, you can compare the effects of market volatilities on Shin Steel and ED 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 ED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and ED.
Diversification Opportunities for Shin Steel and ED
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shin and ED is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and ED Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Co 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 ED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Co has no effect on the direction of Shin Steel i.e., Shin Steel and ED go up and down completely randomly.
Pair Corralation between Shin Steel and ED
Assuming the 90 days trading horizon Shin Steel Co is expected to under-perform the ED. But the stock apears to be less risky and, when comparing its historical volatility, Shin Steel Co is 2.0 times less risky than ED. The stock trades about -0.04 of its potential returns per unit of risk. The ED Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,275,000 in ED Co on October 24, 2024 and sell it today you would earn a total of 350,000 from holding ED Co or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Steel Co vs. ED Co
Performance |
| Timeline |
| Shin Steel |
| ED Co |
Shin Steel and ED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and ED
The main advantage of trading using opposite Shin Steel and ED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel position performs unexpectedly, ED 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 ED will offset losses from the drop in ED's long position.| Shin Steel vs. CKH Food Health | Shin Steel vs. Samsung Life Insurance | Shin Steel vs. Mobile Appliance | Shin Steel vs. Nice Information Telecommunication |
| ED vs. DB Insurance Co | ED vs. Lotte Rental Co | ED vs. Samsung Life Insurance | ED vs. Korea Information Engineering |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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