Correlation Between Myoung Shin and Grand Korea

Can any of the company-specific risk be diversified away by investing in both Myoung Shin 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 Myoung Shin and Grand Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Myoung Shin Industrial and Grand Korea Leisure, you can compare the effects of market volatilities on Myoung Shin 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 Myoung Shin with a short position of Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Myoung Shin and Grand Korea.

Diversification Opportunities for Myoung Shin and Grand Korea

0.21

Correlation Coefficient

Myoung Shin  Grand Korea

Modest diversification

The 3 months correlation between Myoung and Grand is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Myoung Shin Industrial 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 Myoung Shin 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 Myoung Shin Industrial 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 Myoung Shin i.e., Myoung Shin and Grand Korea go up and down completely randomly.

Pair Corralation between Myoung Shin and Grand Korea

Assuming the 90 days trading horizon Myoung Shin Industrial is expected to under-perform the Grand Korea. In addition to that, Myoung Shin is 1.5 times more volatile than Grand Korea Leisure. It trades about -0.16 of its total potential returns per unit of risk. Grand Korea Leisure is currently generating about -0.15 per unit of volatility. If you would invest  1,184,000  in Grand Korea Leisure on October 3, 2024 and sell it today you would lose (80,000) from holding Grand Korea Leisure or give up 6.76% of portfolio value over 90 days.

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

Myoung Shin Industrial  vs.  Grand Korea Leisure

Myoung Shin Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myoung Shin Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grand Korea Leisure

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Myoung Shin and Grand Korea

The main advantage of trading using opposite Myoung Shin and Grand Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Myoung Shin 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 Myoung Shin Industrial 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.