Correlation Between Moadata and Shinsegae Food

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

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

Diversification Opportunities for Moadata and Shinsegae Food

0.23

Correlation Coefficient

Moadata  Shinsegae Food

Modest diversification

The 3 months correlation between Moadata and Shinsegae is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and Moadata 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 Moadata 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 Moadata i.e., Moadata and Shinsegae Food go up and down completely randomly.

Pair Corralation between Moadata and Shinsegae Food

Assuming the 90 days trading horizon Moadata is expected to generate 1.04 times less return on investment than Shinsegae Food. But when comparing it to its historical volatility, Moadata Co is 1.9 times less risky than Shinsegae Food. It trades about 0.26 of its potential returns per unit of risk. Shinsegae Food is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,050,000  in Shinsegae Food on October 11, 2024 and sell it today you would earn a total of  460,000  from holding Shinsegae Food or generate 15.08% return on investment over 90 days.

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

Moadata Co  vs.  Shinsegae Food

Moadata

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shinsegae Food

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Moadata and Shinsegae Food

The main advantage of trading using opposite Moadata and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata 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 Moadata 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.