Correlation Between SK Chemicals and JW Shinyak

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Can any of the company-specific risk be diversified away by investing in both SK Chemicals and JW Shinyak 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 SK Chemicals and JW Shinyak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and JW Shinyak, you can compare the effects of market volatilities on SK Chemicals and JW Shinyak 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 SK Chemicals with a short position of JW Shinyak. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and JW Shinyak.

Diversification Opportunities for SK Chemicals and JW Shinyak

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between 285130 and 067290 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and JW Shinyak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JW Shinyak and SK Chemicals 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 SK Chemicals Co are associated (or correlated) with JW Shinyak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JW Shinyak has no effect on the direction of SK Chemicals i.e., SK Chemicals and JW Shinyak go up and down completely randomly.

Pair Corralation between SK Chemicals and JW Shinyak

Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 0.75 times more return on investment than JW Shinyak. However, SK Chemicals Co is 1.34 times less risky than JW Shinyak. It trades about -0.07 of its potential returns per unit of risk. JW Shinyak is currently generating about -0.07 per unit of risk. If you would invest  7,298,103  in SK Chemicals Co on August 27, 2024 and sell it today you would lose (2,993,103) from holding SK Chemicals Co or give up 41.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SK Chemicals Co  vs.  JW Shinyak

 Performance 
       Timeline  
SK Chemicals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SK Chemicals Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
JW Shinyak 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JW Shinyak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

SK Chemicals and JW Shinyak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SK Chemicals and JW Shinyak

The main advantage of trading using opposite SK Chemicals and JW Shinyak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals position performs unexpectedly, JW Shinyak 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 JW Shinyak will offset losses from the drop in JW Shinyak's long position.
The idea behind SK Chemicals Co and JW Shinyak pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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