Correlation Between UJU Electronics and Shinsegae Engineering

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

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

Diversification Opportunities for UJU Electronics and Shinsegae Engineering

0.55

Correlation Coefficient

UJU Electronics  Shinsegae Engineering

Very weak diversification

The 3 months correlation between UJU and Shinsegae is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding UJU Electronics Co and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering and UJU Electronics 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 UJU Electronics Co are associated (or correlated) with Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of UJU Electronics i.e., UJU Electronics and Shinsegae Engineering go up and down completely randomly.

Pair Corralation between UJU Electronics and Shinsegae Engineering

Assuming the 90 days trading horizon UJU Electronics Co is expected to generate 35.59 times more return on investment than Shinsegae Engineering. However, UJU Electronics is 35.59 times more volatile than Shinsegae Engineering Construction. It trades about 0.16 of its potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about -0.03 per unit of risk. If you would invest  1,428,135  in UJU Electronics Co on October 22, 2024 and sell it today you would earn a total of  531,865  from holding UJU Electronics Co or generate 37.24% return on investment over 90 days.

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

UJU Electronics Co  vs.  Shinsegae Engineering Construc

UJU Electronics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UJU Electronics Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UJU Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with UJU Electronics and Shinsegae Engineering

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

The idea behind UJU Electronics Co and Shinsegae Engineering Construction 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.