Correlation Between Shinsegae Food and Ssangyong Materials

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

By analyzing existing cross correlation between Shinsegae Food and Ssangyong Materials Corp, you can compare the effects of market volatilities on Shinsegae Food and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Food and Ssangyong Materials.

Diversification Opportunities for Shinsegae Food and Ssangyong Materials

-0.13

Correlation Coefficient

Shinsegae Food  Ssangyong Materials

Good diversification

The 3 months correlation between Shinsegae and Ssangyong is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and Ssangyong Materials go up and down completely randomly.

Pair Corralation between Shinsegae Food and Ssangyong Materials

Assuming the 90 days trading horizon Shinsegae Food is expected to generate 2.51 times more return on investment than Ssangyong Materials. However, Shinsegae Food is 2.51 times more volatile than Ssangyong Materials Corp. It trades about 0.15 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.23 per unit of risk. If you would invest  2,920,000  in Shinsegae Food on October 8, 2024 and sell it today you would earn a total of  450,000  from holding Shinsegae Food or generate 15.41% return on investment over 90 days.

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

Shinsegae Food  vs.  Ssangyong Materials Corp

Shinsegae Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ssangyong Materials Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Materials Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shinsegae Food and Ssangyong Materials

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

The idea behind Shinsegae Food and Ssangyong Materials Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.