Correlation Between CU Tech and Shinsung Delta
Can any of the company-specific risk be diversified away by investing in both CU Tech and Shinsung Delta 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 Shinsung Delta 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 Shinsung Delta Tech, you can compare the effects of market volatilities on CU Tech and Shinsung Delta 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 Shinsung Delta. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Tech and Shinsung Delta.
Diversification Opportunities for CU Tech and Shinsung Delta
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 376290 and Shinsung is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and Shinsung Delta Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsung Delta Tech 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 Shinsung Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsung Delta Tech has no effect on the direction of CU Tech i.e., CU Tech and Shinsung Delta go up and down completely randomly.
Pair Corralation between CU Tech and Shinsung Delta
Assuming the 90 days trading horizon CU Tech Corp is expected to under-perform the Shinsung Delta. But the stock apears to be less risky and, when comparing its historical volatility, CU Tech Corp is 4.72 times less risky than Shinsung Delta. The stock trades about -0.19 of its potential returns per unit of risk. The Shinsung Delta Tech is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 4,315,000 in Shinsung Delta Tech on September 2, 2024 and sell it today you would earn a total of 2,225,000 from holding Shinsung Delta Tech or generate 51.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Tech Corp vs. Shinsung Delta Tech
Performance |
| Timeline |
| CU Tech Corp |
| Shinsung Delta Tech |
CU Tech and Shinsung Delta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Tech and Shinsung Delta
The main advantage of trading using opposite CU Tech and Shinsung Delta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Tech position performs unexpectedly, Shinsung Delta 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 Shinsung Delta will offset losses from the drop in Shinsung Delta's long position.The idea behind CU Tech Corp and Shinsung Delta Tech 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.| Shinsung Delta vs. Korea New Network | Shinsung Delta vs. ICD Co | Shinsung Delta vs. DYPNF CoLtd | Shinsung Delta vs. Busan 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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