Correlation Between Shinil Electronics and Wave Electronics

Can any of the company-specific risk be diversified away by investing in both Shinil Electronics and Wave Electronics 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 Wave Electronics 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 Wave Electronics Co, you can compare the effects of market volatilities on Shinil Electronics and Wave Electronics 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 Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Electronics and Wave Electronics.

Diversification Opportunities for Shinil Electronics and Wave Electronics

0.53

Correlation Coefficient

Shinil Electronics  Wave Electronics

Very weak diversification

The 3 months correlation between Shinil and Wave is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Electronics Co and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics 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 Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of Shinil Electronics i.e., Shinil Electronics and Wave Electronics go up and down completely randomly.

Pair Corralation between Shinil Electronics and Wave Electronics

Assuming the 90 days trading horizon Shinil Electronics is expected to generate 1.68 times less return on investment than Wave Electronics. But when comparing it to its historical volatility, Shinil Electronics Co is 3.38 times less risky than Wave Electronics. It trades about 0.08 of its potential returns per unit of risk. Wave Electronics Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  382,500  in Wave Electronics Co on December 29, 2024 and sell it today you would earn a total of  17,000  from holding Wave Electronics Co or generate 4.44% return on investment over 90 days.

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

Shinil Electronics Co  vs.  Wave Electronics Co

Shinil Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Electronics Co are ranked lower than 6 (%) 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.

Wave Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wave Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wave Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shinil Electronics and Wave Electronics

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

The idea behind Shinil Electronics Co and Wave Electronics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.