Correlation Between Hotel Shilla and Sewoon Medical

Can any of the company-specific risk be diversified away by investing in both Hotel Shilla and Sewoon Medical 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 Hotel Shilla and Sewoon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hotel Shilla Co and Sewoon Medical Co, you can compare the effects of market volatilities on Hotel Shilla and Sewoon Medical 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 Hotel Shilla with a short position of Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Shilla and Sewoon Medical.

Diversification Opportunities for Hotel Shilla and Sewoon Medical

0.0

Correlation Coefficient

Hotel Shilla  Sewoon Medical

Pay attention - limited upside

The 3 months correlation between Hotel and Sewoon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Shilla Co and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical and Hotel Shilla 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 Hotel Shilla Co are associated (or correlated) with Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of Hotel Shilla i.e., Hotel Shilla and Sewoon Medical go up and down completely randomly.

Pair Corralation between Hotel Shilla and Sewoon Medical

Assuming the 90 days trading horizon Hotel Shilla Co is expected to generate 1.7 times more return on investment than Sewoon Medical. However, Hotel Shilla is 1.7 times more volatile than Sewoon Medical Co. It trades about 0.12 of its potential returns per unit of risk. Sewoon Medical Co is currently generating about 0.06 per unit of risk. If you would invest  3,035,000  in Hotel Shilla Co on December 23, 2024 and sell it today you would earn a total of  350,000  from holding Hotel Shilla Co or generate 11.53% return on investment over 90 days.

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

Hotel Shilla Co  vs.  Sewoon Medical Co

Hotel Shilla

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Shilla Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hotel Shilla sustained solid returns over the last few months and may actually be approaching a breakup point.

Sewoon Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sewoon Medical Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sewoon Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hotel Shilla and Sewoon Medical

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

The idea behind Hotel Shilla Co and Sewoon Medical 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.