Correlation Between Samlip General and Shinsegae Information

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

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

Diversification Opportunities for Samlip General and Shinsegae Information

0.6

Correlation Coefficient

Samlip General  Shinsegae Information

Poor diversification

The 3 months correlation between Samlip and Shinsegae is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Shinsegae Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Information and Samlip General 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 Samlip General Foods are associated (or correlated) with Shinsegae Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Information has no effect on the direction of Samlip General i.e., Samlip General and Shinsegae Information go up and down completely randomly.

Pair Corralation between Samlip General and Shinsegae Information

Assuming the 90 days trading horizon Samlip General is expected to generate 3.48 times less return on investment than Shinsegae Information. But when comparing it to its historical volatility, Samlip General Foods is 3.85 times less risky than Shinsegae Information. It trades about 0.21 of its potential returns per unit of risk. Shinsegae Information Communication is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  905,000  in Shinsegae Information Communication on September 20, 2024 and sell it today you would earn a total of  204,000  from holding Shinsegae Information Communication or generate 22.54% return on investment over 90 days.

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

Samlip General Foods  vs.  Shinsegae Information Communic

Samlip General Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shinsegae Information

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Information Communication are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samlip General and Shinsegae Information

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

The idea behind Samlip General Foods and Shinsegae 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.