Correlation Between Shinsegae Information and Insung Information

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

By analyzing existing cross correlation between Shinsegae Information Communication and Insung Information Co, you can compare the effects of market volatilities on Shinsegae Information and Insung Information 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 Information with a short position of Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae Information and Insung Information.

Diversification Opportunities for Shinsegae Information and Insung Information

0.24

Correlation Coefficient

Shinsegae Information  Insung Information

Modest diversification

The 3 months correlation between Shinsegae and Insung is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Information Communic and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information and Shinsegae Information 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 Information Communication are associated (or correlated) with Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of Shinsegae Information i.e., Shinsegae Information and Insung Information go up and down completely randomly.

Pair Corralation between Shinsegae Information and Insung Information

Assuming the 90 days trading horizon Shinsegae Information Communication is expected to generate 2.23 times more return on investment than Insung Information. However, Shinsegae Information is 2.23 times more volatile than Insung Information Co. It trades about 0.13 of its potential returns per unit of risk. Insung Information Co is currently generating about 0.01 per unit of risk. If you would invest  853,902  in Shinsegae Information Communication on December 1, 2024 and sell it today you would earn a total of  385,098  from holding Shinsegae Information Communication or generate 45.1% return on investment over 90 days.

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

Shinsegae Information Communic  vs.  Insung Information Co

Shinsegae Information

Risk-Adjusted Performance

OK

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

Insung Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insung Information Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Insung Information 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 Information and Insung Information

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

The idea behind Shinsegae Information Communication and Insung Information 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.