Correlation Between Shinil Industrial and Ssangyong Information

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

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

Diversification Opportunities for Shinil Industrial and Ssangyong Information

0.68

Correlation Coefficient

Shinil Industrial  Ssangyong Information

Poor diversification

The 3 months correlation between Shinil and Ssangyong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Industrial Co and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information and Shinil Industrial 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 Industrial Co are associated (or correlated) with Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of Shinil Industrial i.e., Shinil Industrial and Ssangyong Information go up and down completely randomly.

Pair Corralation between Shinil Industrial and Ssangyong Information

Assuming the 90 days trading horizon Shinil Industrial is expected to generate 4.67 times less return on investment than Ssangyong Information. But when comparing it to its historical volatility, Shinil Industrial Co is 5.39 times less risky than Ssangyong Information. It trades about 0.1 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  63,200  in Ssangyong Information Communication on December 26, 2024 and sell it today you would earn a total of  13,200  from holding Ssangyong Information Communication or generate 20.89% return on investment over 90 days.

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

Shinil Industrial Co  vs.  Ssangyong Information Communic

Shinil Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Industrial Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinil Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinil Industrial and Ssangyong Information

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

The idea behind Shinil Industrial Co and Ssangyong Information Communication 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.