Correlation Between Shin Steel and DeviceENGCOLtd
Can any of the company-specific risk be diversified away by investing in both Shin Steel and DeviceENGCOLtd 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 DeviceENGCOLtd 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 DeviceENGCOLtd, you can compare the effects of market volatilities on Shin Steel and DeviceENGCOLtd 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 DeviceENGCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and DeviceENGCOLtd.
Diversification Opportunities for Shin Steel and DeviceENGCOLtd
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shin and DeviceENGCOLtd is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and DeviceENGCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeviceENGCOLtd 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 DeviceENGCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeviceENGCOLtd has no effect on the direction of Shin Steel i.e., Shin Steel and DeviceENGCOLtd go up and down completely randomly.
Pair Corralation between Shin Steel and DeviceENGCOLtd
Assuming the 90 days trading horizon Shin Steel Co is expected to generate 1.63 times more return on investment than DeviceENGCOLtd. However, Shin Steel is 1.63 times more volatile than DeviceENGCOLtd. It trades about 0.02 of its potential returns per unit of risk. DeviceENGCOLtd is currently generating about -0.24 per unit of risk. If you would invest 248,500 in Shin Steel Co on September 3, 2024 and sell it today you would earn a total of 500.00 from holding Shin Steel Co or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Steel Co vs. DeviceENGCOLtd
Performance |
| Timeline |
| Shin Steel |
| DeviceENGCOLtd |
Shin Steel and DeviceENGCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and DeviceENGCOLtd
The main advantage of trading using opposite Shin Steel and DeviceENGCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel position performs unexpectedly, DeviceENGCOLtd 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 DeviceENGCOLtd will offset losses from the drop in DeviceENGCOLtd'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 |
| DeviceENGCOLtd vs. SK Telecom Co | DeviceENGCOLtd vs. Homecast CoLtd | DeviceENGCOLtd vs. Shin Steel Co | DeviceENGCOLtd vs. Hyundai Home Shopping |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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