Correlation Between Shinsegae Food and TS Investment

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

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

Diversification Opportunities for Shinsegae Food and TS Investment

0.35

Correlation Coefficient

Shinsegae Food  TS Investment

Weak diversification

The 3 months correlation between Shinsegae and 246690 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Food and TS Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TS Investment 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 TS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TS Investment Corp has no effect on the direction of Shinsegae Food i.e., Shinsegae Food and TS Investment go up and down completely randomly.

Pair Corralation between Shinsegae Food and TS Investment

Assuming the 90 days trading horizon Shinsegae Food is expected to generate 14.42 times less return on investment than TS Investment. But when comparing it to its historical volatility, Shinsegae Food is 1.05 times less risky than TS Investment. It trades about 0.0 of its potential returns per unit of risk. TS Investment Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  99,800  in TS Investment Corp on October 22, 2024 and sell it today you would lose (2,300) from holding TS Investment Corp or give up 2.3% of portfolio value over 90 days.

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

Shinsegae Food  vs.  TS Investment 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.

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shinsegae Food and TS Investment

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

The idea behind Shinsegae Food and TS Investment 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.