Correlation Between Shinsegae Food and Humax Holdings

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

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

Diversification Opportunities for Shinsegae Food and Humax Holdings

0.06

Correlation Coefficient

Shinsegae Food  Humax Holdings

Significant diversification

The 3 months correlation between Shinsegae and Humax is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and Humax Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax Holdings and Shinsegae Food 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 Shinsegae Food are associated (or correlated) with Humax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax Holdings has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and Humax Holdings go up and down completely randomly.

Pair Corralation between Shinsegae Food and Humax Holdings

Assuming the 90 days trading horizon Shinsegae Food is expected to under-perform the Humax Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Shinsegae Food is 3.0 times less risky than Humax Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Humax Holdings Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  240,000  in Humax Holdings Co on December 30, 2024 and sell it today you would lose (39,500) from holding Humax Holdings Co or give up 16.46% of portfolio value over 90 days.

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

Shinsegae Food  vs.  Humax Holdings Co

Shinsegae Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinsegae Food 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Humax Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humax Holdings Co 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 Shinsegae Food and Humax Holdings

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

The idea behind Shinsegae Food and Humax Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.