Correlation Between Shin Steel and LB Investment
Can any of the company-specific risk be diversified away by investing in both Shin Steel and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on Shin Steel and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and LB Investment.
Diversification Opportunities for Shin Steel and LB Investment
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shin and 309960 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Shin Steel i.e., Shin Steel and LB Investment go up and down completely randomly.
Pair Corralation between Shin Steel and LB Investment
Assuming the 90 days trading horizon Shin Steel is expected to generate 12.86 times less return on investment than LB Investment. But when comparing it to its historical volatility, Shin Steel Co is 5.82 times less risky than LB Investment. It trades about 0.11 of its potential returns per unit of risk. LB Investment is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 310,000 in LB Investment on November 27, 2024 and sell it today you would earn a total of 107,000 from holding LB Investment or generate 34.52% 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. LB Investment
Performance |
| Timeline |
| Shin Steel |
| LB Investment |
Shin Steel and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and LB Investment
The main advantage of trading using opposite Shin Steel and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Shin Steel vs. Korea Computer | Shin Steel vs. Sewoon Medical Co | Shin Steel vs. Industrial Bank | Shin Steel vs. Hyundai Industrial Co |
| LB Investment vs. Dongil Metal Co | LB Investment vs. Industrial Bank | LB Investment vs. Finebesteel | LB Investment vs. Songwon Industrial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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