Correlation Between Daishin Information and Shin Steel

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

By analyzing existing cross correlation between Daishin Information Communications and Shin Steel Co, you can compare the effects of market volatilities on Daishin Information and Shin Steel 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 Daishin Information with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and Shin Steel.

Diversification Opportunities for Daishin Information and Shin Steel

0.09

Correlation Coefficient

Daishin Information  Shin Steel

Significant diversification

The 3 months correlation between Daishin and Shin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and Daishin Information 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 Daishin Information Communications are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of Daishin Information i.e., Daishin Information and Shin Steel go up and down completely randomly.

Pair Corralation between Daishin Information and Shin Steel

Assuming the 90 days trading horizon Daishin Information Communications is expected to under-perform the Shin Steel. In addition to that, Daishin Information is 1.22 times more volatile than Shin Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Shin Steel Co is currently generating about 0.02 per unit of volatility. If you would invest  247,980  in Shin Steel Co on December 23, 2024 and sell it today you would earn a total of  2,520  from holding Shin Steel Co or generate 1.02% return on investment over 90 days.

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

Daishin Information Communicat  vs.  Shin Steel Co

Daishin Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daishin Information Communications 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.

Shin Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Steel Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shin Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daishin Information and Shin Steel

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

The idea behind Daishin Information Communications and Shin Steel 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.