Correlation Between RPBio and Shinsegae
Can any of the company-specific risk be diversified away by investing in both RPBio and Shinsegae 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 RPBio and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPBio Inc and Shinsegae, you can compare the effects of market volatilities on RPBio and Shinsegae 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 RPBio with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPBio and Shinsegae.
Diversification Opportunities for RPBio and Shinsegae
Very poor diversification
The 3 months correlation between RPBio and Shinsegae is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and RPBio 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 RPBio Inc are associated (or correlated) with Shinsegae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae has no effect on the direction of RPBio i.e., RPBio and Shinsegae go up and down completely randomly.
Pair Corralation between RPBio and Shinsegae
Assuming the 90 days trading horizon RPBio Inc is expected to generate 1.41 times more return on investment than Shinsegae. However, RPBio is 1.41 times more volatile than Shinsegae. It trades about -0.19 of its potential returns per unit of risk. Shinsegae is currently generating about -0.32 per unit of risk. If you would invest 613,000 in RPBio Inc on September 3, 2024 and sell it today you would lose (73,000) from holding RPBio Inc or give up 11.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RPBio Inc vs. Shinsegae
Performance |
| Timeline |
| RPBio Inc |
| Shinsegae |
RPBio and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPBio and Shinsegae
The main advantage of trading using opposite RPBio and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPBio position performs unexpectedly, Shinsegae 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 Shinsegae will offset losses from the drop in Shinsegae's long position.| RPBio vs. PJ Metal Co | RPBio vs. Wave Electronics Co | RPBio vs. Youngsin Metal Industrial | RPBio vs. Daeduck Electronics Co |
| Shinsegae vs. Korea Real Estate | Shinsegae vs. Busan Industrial Co | Shinsegae vs. UNISEM Co | Shinsegae vs. RPBio Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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