Correlation Between Hanshin Construction and Shinil Electronics
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Shinil Electronics 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 Hanshin Construction and Shinil Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Shinil Electronics Co, you can compare the effects of market volatilities on Hanshin Construction and Shinil Electronics 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 Hanshin Construction with a short position of Shinil Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Shinil Electronics.
Diversification Opportunities for Hanshin Construction and Shinil Electronics
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanshin and Shinil is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Shinil Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Electronics and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Shinil Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Electronics has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Shinil Electronics go up and down completely randomly.
Pair Corralation between Hanshin Construction and Shinil Electronics
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Shinil Electronics. In addition to that, Hanshin Construction is 1.74 times more volatile than Shinil Electronics Co. It trades about -0.02 of its total potential returns per unit of risk. Shinil Electronics Co is currently generating about -0.01 per unit of volatility. If you would invest 146,600 in Shinil Electronics Co on September 23, 2024 and sell it today you would lose (2,400) from holding Shinil Electronics Co or give up 1.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanshin Construction Co vs. Shinil Electronics Co
Performance |
Timeline |
Hanshin Construction |
Shinil Electronics |
Hanshin Construction and Shinil Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanshin Construction and Shinil Electronics
The main advantage of trading using opposite Hanshin Construction and Shinil Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Shinil Electronics 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 Electronics will offset losses from the drop in Shinil Electronics' long position.Hanshin Construction vs. AptaBio Therapeutics | Hanshin Construction vs. Wonbang Tech Co | Hanshin Construction vs. Busan Industrial Co | Hanshin Construction vs. Busan Ind |
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Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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