Correlation Between Shinsegae Food and Asia Seed

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

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

Diversification Opportunities for Shinsegae Food and Asia Seed

0.09

Correlation Coefficient

Shinsegae Food  Asia Seed

Significant diversification

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

Pair Corralation between Shinsegae Food and Asia Seed

Assuming the 90 days trading horizon Shinsegae Food is expected to under-perform the Asia Seed. But the stock apears to be less risky and, when comparing its historical volatility, Shinsegae Food is 1.24 times less risky than Asia Seed. The stock trades about -0.17 of its potential returns per unit of risk. The Asia Seed CoLtd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  196,500  in Asia Seed CoLtd on December 26, 2024 and sell it today you would lose (15,800) from holding Asia Seed CoLtd or give up 8.04% 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.  Asia Seed CoLtd

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.

Asia Seed CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Seed CoLtd 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 Asia Seed

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

The idea behind Shinsegae Food and Asia Seed CoLtd 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.