Correlation Between Shinsegae Food and High Tech

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

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

Diversification Opportunities for Shinsegae Food and High Tech

-0.02

Correlation Coefficient

Shinsegae Food  High Tech

Good diversification

The 3 months correlation between Shinsegae and High is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and High Tech Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tech Pharm 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 High Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tech Pharm has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and High Tech go up and down completely randomly.

Pair Corralation between Shinsegae Food and High Tech

Assuming the 90 days trading horizon Shinsegae Food is expected to generate 3.76 times more return on investment than High Tech. However, Shinsegae Food is 3.76 times more volatile than High Tech Pharm. It trades about 0.18 of its potential returns per unit of risk. High Tech Pharm is currently generating about 0.55 per unit of risk. If you would invest  3,050,000  in Shinsegae Food on October 11, 2024 and sell it today you would earn a total of  595,000  from holding Shinsegae Food or generate 19.51% 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.  High Tech Pharm

Shinsegae Food

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Food are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

High Tech Pharm

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Tech Pharm are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, High Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinsegae Food and High Tech

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

The idea behind Shinsegae Food and High Tech Pharm 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.