Correlation Between Settlebank and Shinsegae Food

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

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

Diversification Opportunities for Settlebank and Shinsegae Food

0.61

Correlation Coefficient

Settlebank  Shinsegae Food

Poor diversification

The 3 months correlation between Settlebank and Shinsegae is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and Settlebank 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 Settlebank 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 Settlebank i.e., Settlebank and Shinsegae Food go up and down completely randomly.

Pair Corralation between Settlebank and Shinsegae Food

Assuming the 90 days trading horizon Settlebank is expected to under-perform the Shinsegae Food. But the stock apears to be less risky and, when comparing its historical volatility, Settlebank is 1.19 times less risky than Shinsegae Food. The stock trades about -0.09 of its potential returns per unit of risk. The Shinsegae Food is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,605,000  in Shinsegae Food on September 29, 2024 and sell it today you would earn a total of  195,000  from holding Shinsegae Food or generate 5.41% return on investment over 90 days.

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

Settlebank  vs.  Shinsegae Food

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shinsegae Food

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Food are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Settlebank and Shinsegae Food

The main advantage of trading using opposite Settlebank and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank 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 Settlebank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.