Correlation Between Shinsegae Information and System

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

Diversification Opportunities for Shinsegae Information and System

0.67

Correlation Coefficient

Shinsegae Information  System

Poor diversification

The 3 months correlation between Shinsegae and System is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Information Communic and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Shinsegae Information i.e., Shinsegae Information and System go up and down completely randomly.

Pair Corralation between Shinsegae Information and System

Assuming the 90 days trading horizon Shinsegae Information Communication is expected to generate 1.62 times more return on investment than System. However, Shinsegae Information is 1.62 times more volatile than System and Application. It trades about 0.13 of its potential returns per unit of risk. System and Application is currently generating about 0.08 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	Significant
Accuracy	100.0%
Values	Daily Returns

Shinsegae Information Communic  vs.  System and Application

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.

System and Application

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in System and Application are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, System sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinsegae Information and System

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

The idea behind Shinsegae Information Communication and System and Application 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.