Correlation Between Shinsegae Engineering and Samick Musical

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

By analyzing existing cross correlation between Shinsegae Engineering Construction and Samick Musical Instruments, you can compare the effects of market volatilities on Shinsegae Engineering and Samick Musical 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 Engineering with a short position of Samick Musical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Engineering and Samick Musical.

Diversification Opportunities for Shinsegae Engineering and Samick Musical

0.13

Correlation Coefficient

Shinsegae Engineering  Samick Musical

Average diversification

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

Pair Corralation between Shinsegae Engineering and Samick Musical

Assuming the 90 days trading horizon Shinsegae Engineering is expected to generate 27.46 times less return on investment than Samick Musical. But when comparing it to its historical volatility, Shinsegae Engineering Construction is 30.05 times less risky than Samick Musical. It trades about 0.34 of its potential returns per unit of risk. Samick Musical Instruments is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  102,763  in Samick Musical Instruments on October 8, 2024 and sell it today you would earn a total of  14,437  from holding Samick Musical Instruments or generate 14.05% return on investment over 90 days.

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

Shinsegae Engineering Construc  vs.  Samick Musical Instruments

Shinsegae Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Samick Musical Instr

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samick Musical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinsegae Engineering and Samick Musical

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

The idea behind Shinsegae Engineering Construction and Samick Musical Instruments 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.