Correlation Between CU Tech and Shinsegae
Can any of the company-specific risk be diversified away by investing in both CU Tech 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 CU Tech and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Tech Corp and Shinsegae, you can compare the effects of market volatilities on CU Tech 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 CU Tech with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Tech and Shinsegae.
Diversification Opportunities for CU Tech and Shinsegae
Very poor diversification
The 3 months correlation between 376290 and Shinsegae is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and CU Tech 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 CU Tech Corp 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 CU Tech i.e., CU Tech and Shinsegae go up and down completely randomly.
Pair Corralation between CU Tech and Shinsegae
Assuming the 90 days trading horizon CU Tech Corp is expected to generate 1.11 times more return on investment than Shinsegae. However, CU Tech is 1.11 times more volatile than Shinsegae. It trades about -0.03 of its potential returns per unit of risk. Shinsegae is currently generating about -0.04 per unit of risk. If you would invest 408,866 in CU Tech Corp on September 13, 2024 and sell it today you would lose (118,866) from holding CU Tech Corp or give up 29.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
CU Tech Corp vs. Shinsegae
Performance |
| Timeline |
| CU Tech Corp |
| Shinsegae |
CU Tech and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Tech and Shinsegae
The main advantage of trading using opposite CU Tech and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Tech 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.The idea behind CU Tech Corp and Shinsegae 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.| Shinsegae vs. CU Tech Corp | Shinsegae vs. Spolytech Co | Shinsegae vs. Daesung Hi Tech Co | Shinsegae vs. Automobile Pc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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