Correlation Between Shinil Industrial and Iljin Display

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

Diversification Opportunities for Shinil Industrial and Iljin Display

0.02

Correlation Coefficient

Shinil Industrial  Iljin Display

Significant diversification

The 3 months correlation between Shinil and Iljin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Industrial Co and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Shinil Industrial i.e., Shinil Industrial and Iljin Display go up and down completely randomly.

Pair Corralation between Shinil Industrial and Iljin Display

Assuming the 90 days trading horizon Shinil Industrial Co is expected to generate 0.55 times more return on investment than Iljin Display. However, Shinil Industrial Co is 1.82 times less risky than Iljin Display. It trades about 0.1 of its potential returns per unit of risk. Iljin Display is currently generating about -0.01 per unit of risk. If you would invest  142,600  in Shinil Industrial Co on December 25, 2024 and sell it today you would earn a total of  7,500  from holding Shinil Industrial Co or generate 5.26% return on investment over 90 days.

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

Shinil Industrial Co  vs.  Iljin Display

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.

Iljin Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iljin Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iljin Display 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 Industrial and Iljin Display

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

The idea behind Shinil Industrial Co and Iljin Display 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.