Correlation Between LS Materials and Shinsegae Food
Can any of the company-specific risk be diversified away by investing in both LS Materials and Shinsegae Food 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 LS Materials and Shinsegae Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Shinsegae Food, you can compare the effects of market volatilities on LS Materials and Shinsegae Food 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 LS Materials with a short position of Shinsegae Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Shinsegae Food.
Diversification Opportunities for LS Materials and Shinsegae Food
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 417200 and Shinsegae is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and LS Materials 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 LS Materials are associated (or correlated) with Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of LS Materials i.e., LS Materials and Shinsegae Food go up and down completely randomly.
Pair Corralation between LS Materials and Shinsegae Food
Assuming the 90 days trading horizon LS Materials is expected to generate 3.06 times more return on investment than Shinsegae Food. However, LS Materials is 3.06 times more volatile than Shinsegae Food. It trades about 0.1 of its potential returns per unit of risk. Shinsegae Food is currently generating about -0.41 per unit of risk. If you would invest 1,203,000 in LS Materials on November 9, 2024 and sell it today you would earn a total of 92,000 from holding LS Materials or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Shinsegae Food
Performance |
| Timeline |
| LS Materials |
| Shinsegae Food |
LS Materials and Shinsegae Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Shinsegae Food
The main advantage of trading using opposite LS Materials and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, Shinsegae Food 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 Food will offset losses from the drop in Shinsegae Food's long position.| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials vs. SK Hynix |
| Shinsegae Food vs. Tae Kyung Chemical | Shinsegae Food vs. Solus Advanced Materials | Shinsegae Food vs. RF Materials Co | Shinsegae Food vs. EV Advanced Material |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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