Correlation Between Shinsegae Information and Moadata Co

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

Diversification Opportunities for Shinsegae Information and Moadata Co

0.6

Correlation Coefficient

Shinsegae Information  Moadata Co

Poor diversification

The 3 months correlation between Shinsegae and Moadata is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae Information Communic and Moadata Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moadata Co 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 Moadata Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moadata Co has no effect on the direction of Shinsegae Information i.e., Shinsegae Information and Moadata Co go up and down completely randomly.

Pair Corralation between Shinsegae Information and Moadata Co

Assuming the 90 days trading horizon Shinsegae Information Communication is expected to generate 1.31 times more return on investment than Moadata Co. However, Shinsegae Information is 1.31 times more volatile than Moadata Co. It trades about 0.15 of its potential returns per unit of risk. Moadata Co is currently generating about -0.09 per unit of risk. If you would invest  895,000  in Shinsegae Information Communication on September 21, 2024 and sell it today you would earn a total of  161,000  from holding Shinsegae Information Communication or generate 17.99% 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.  Moadata Co

Shinsegae Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Information Communication are ranked lower than 6 (%) 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.

Moadata Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Shinsegae Information Communication and Moadata 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.