Correlation Between Shinil Electronics and Grand Korea

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

Diversification Opportunities for Shinil Electronics and Grand Korea

0.07

Correlation Coefficient

Shinil Electronics  Grand Korea

Significant diversification

The 3 months correlation between Shinil and Grand is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Electronics Co and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure 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 Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of Shinil Electronics i.e., Shinil Electronics and Grand Korea go up and down completely randomly.

Pair Corralation between Shinil Electronics and Grand Korea

Assuming the 90 days trading horizon Shinil Electronics Co is expected to generate 0.88 times more return on investment than Grand Korea. However, Shinil Electronics Co is 1.13 times less risky than Grand Korea. It trades about 0.07 of its potential returns per unit of risk. Grand Korea Leisure is currently generating about -0.03 per unit of risk. If you would invest  141,710  in Shinil Electronics Co on December 1, 2024 and sell it today you would earn a total of  7,690  from holding Shinil Electronics Co or generate 5.43% return on investment over 90 days.

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

Shinil Electronics Co  vs.  Grand Korea Leisure

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 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinil Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grand Korea Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Korea Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grand Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinil Electronics and Grand Korea

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

The idea behind Shinil Electronics Co and Grand Korea Leisure 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..