Correlation Between Osteonic and Shinsegae Food

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

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

Diversification Opportunities for Osteonic and Shinsegae Food

0.46

Correlation Coefficient

Osteonic  Shinsegae Food

Very weak diversification

The 3 months correlation between Osteonic and Shinsegae is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Osteonic Co and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and Osteonic 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 Osteonic Co are associated (or correlated) with Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of Osteonic i.e., Osteonic and Shinsegae Food go up and down completely randomly.

Pair Corralation between Osteonic and Shinsegae Food

Assuming the 90 days trading horizon Osteonic Co is expected to generate 0.75 times more return on investment than Shinsegae Food. However, Osteonic Co is 1.33 times less risky than Shinsegae Food. It trades about 0.43 of its potential returns per unit of risk. Shinsegae Food is currently generating about 0.08 per unit of risk. If you would invest  556,000  in Osteonic Co on October 20, 2024 and sell it today you would earn a total of  237,000  from holding Osteonic Co or generate 42.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Osteonic Co  vs.  Shinsegae Food

Osteonic

Risk-Adjusted Performance

10 of 100

OK

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

Shinsegae Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Osteonic and Shinsegae Food

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

The idea behind Osteonic Co and Shinsegae Food 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.