Correlation Between Shinsegae Engineering and Humax Holdings

Can any of the company-specific risk be diversified away by investing in both Shinsegae Engineering and Humax Holdings 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 Humax Holdings 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 Humax Holdings Co, you can compare the effects of market volatilities on Shinsegae Engineering and Humax Holdings 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 Humax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Engineering and Humax Holdings.

Diversification Opportunities for Shinsegae Engineering and Humax Holdings

-0.04

Correlation Coefficient

Shinsegae Engineering  Humax Holdings

Good diversification

The 3 months correlation between Shinsegae and Humax is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Engineering Construc and Humax Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax Holdings 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 Humax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax Holdings has no effect on the direction of Shinsegae Engineering i.e., Shinsegae Engineering and Humax Holdings go up and down completely randomly.

Pair Corralation between Shinsegae Engineering and Humax Holdings

Assuming the 90 days trading horizon Shinsegae Engineering Construction is expected to generate 0.59 times more return on investment than Humax Holdings. However, Shinsegae Engineering Construction is 1.69 times less risky than Humax Holdings. It trades about 0.22 of its potential returns per unit of risk. Humax Holdings Co is currently generating about -0.15 per unit of risk. If you would invest  1,412,000  in Shinsegae Engineering Construction on September 15, 2024 and sell it today you would earn a total of  393,000  from holding Shinsegae Engineering Construction or generate 27.83% return on investment over 90 days.

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

Shinsegae Engineering Construc  vs.  Humax Holdings Co

Shinsegae Engineering

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Engineering Construction are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Humax Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humax Holdings Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shinsegae Engineering and Humax Holdings

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

The idea behind Shinsegae Engineering Construction and Humax Holdings Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.