Correlation Between Shinil Electronics and Kukil Metal

Can any of the company-specific risk be diversified away by investing in both Shinil Electronics and Kukil Metal 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 Shinil Electronics and Kukil Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shinil Electronics Co and Kukil Metal Co, you can compare the effects of market volatilities on Shinil Electronics and Kukil Metal 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 Shinil Electronics with a short position of Kukil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Electronics and Kukil Metal.

Diversification Opportunities for Shinil Electronics and Kukil Metal

0.67

Correlation Coefficient

Shinil Electronics  Kukil Metal

Poor diversification

The 3 months correlation between Shinil and Kukil is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Electronics Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal and Shinil Electronics 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 Shinil Electronics Co are associated (or correlated) with Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of Shinil Electronics i.e., Shinil Electronics and Kukil Metal go up and down completely randomly.

Pair Corralation between Shinil Electronics and Kukil Metal

Assuming the 90 days trading horizon Shinil Electronics Co is expected to under-perform the Kukil Metal. But the stock apears to be less risky and, when comparing its historical volatility, Shinil Electronics Co is 3.25 times less risky than Kukil Metal. The stock trades about -0.03 of its potential returns per unit of risk. The Kukil Metal Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  244,137  in Kukil Metal Co on September 20, 2024 and sell it today you would lose (67,237) from holding Kukil Metal Co or give up 27.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Shinil Electronics Co  vs.  Kukil Metal Co

Shinil Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinil Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kukil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kukil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shinil Electronics and Kukil Metal

The main advantage of trading using opposite Shinil Electronics and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinil Electronics position performs unexpectedly, Kukil Metal 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 Kukil Metal will offset losses from the drop in Kukil Metal's long position.

The idea behind Shinil Electronics Co and Kukil Metal Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..