Correlation Between ENERGYMACHINERY KOREA and Shinil Industrial

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

By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Shinil Industrial Co, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Shinil Industrial 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 ENERGYMACHINERY KOREA with a short position of Shinil Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Shinil Industrial.

Diversification Opportunities for ENERGYMACHINERY KOREA and Shinil Industrial

-0.34

Correlation Coefficient

ENERGYMACHINERY KOREA  Shinil Industrial

Very good diversification

The 3 months correlation between ENERGYMACHINERY and Shinil is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Shinil Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Industrial and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Shinil Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Industrial has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Shinil Industrial go up and down completely randomly.

Pair Corralation between ENERGYMACHINERY KOREA and Shinil Industrial

Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to under-perform the Shinil Industrial. In addition to that, ENERGYMACHINERY KOREA is 1.84 times more volatile than Shinil Industrial Co. It trades about -0.05 of its total potential returns per unit of risk. Shinil Industrial Co is currently generating about 0.08 per unit of volatility. If you would invest  141,000  in Shinil Industrial Co on December 29, 2024 and sell it today you would earn a total of  5,800  from holding Shinil Industrial Co or generate 4.11% return on investment over 90 days.

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

ENERGYMACHINERY KOREA CoLtd  vs.  Shinil Industrial Co

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

Very Weak

Over the last 90 days ENERGYMACHINERY KOREA CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENERGYMACHINERY KOREA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shinil Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinil Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ENERGYMACHINERY KOREA and Shinil Industrial

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

The idea behind ENERGYMACHINERY KOREA CoLtd and Shinil Industrial 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.