Correlation Between Camus Engineering and Shinsegae Engineering

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

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

Diversification Opportunities for Camus Engineering and Shinsegae Engineering

0.47

Correlation Coefficient

Camus Engineering  Shinsegae Engineering

Very weak diversification

The 3 months correlation between Camus and Shinsegae is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Camus Engineering Construction and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering and Camus Engineering 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 Camus Engineering Construction are associated (or correlated) with Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of Camus Engineering i.e., Camus Engineering and Shinsegae Engineering go up and down completely randomly.

Pair Corralation between Camus Engineering and Shinsegae Engineering

Assuming the 90 days trading horizon Camus Engineering Construction is expected to under-perform the Shinsegae Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Camus Engineering Construction is 1.52 times less risky than Shinsegae Engineering. The stock trades about -0.03 of its potential returns per unit of risk. The Shinsegae Engineering Construction is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,684,405  in Shinsegae Engineering Construction on October 10, 2024 and sell it today you would earn a total of  127,595  from holding Shinsegae Engineering Construction or generate 7.58% return on investment over 90 days.

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

Camus Engineering Construction  vs.  Shinsegae Engineering Construc

Camus Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shinsegae Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Camus Engineering and Shinsegae Engineering

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

The idea behind Camus Engineering Construction and Shinsegae Engineering Construction 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.