Correlation Between Shinyoung HappyTomorrow and Barrel

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

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

Diversification Opportunities for Shinyoung HappyTomorrow and Barrel

0.86

Correlation Coefficient

Shinyoung HappyTomorrow  Barrel

Very poor diversification

The 3 months correlation between Shinyoung and Barrel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shinyoung HappyTomorrow SPAC and Barrel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrel and Shinyoung HappyTomorrow 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 Shinyoung HappyTomorrow SPAC are associated (or correlated) with Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrel has no effect on the direction of Shinyoung HappyTomorrow i.e., Shinyoung HappyTomorrow and Barrel go up and down completely randomly.

Pair Corralation between Shinyoung HappyTomorrow and Barrel

Assuming the 90 days trading horizon Shinyoung HappyTomorrow SPAC is expected to generate 0.61 times more return on investment than Barrel. However, Shinyoung HappyTomorrow SPAC is 1.65 times less risky than Barrel. It trades about -0.11 of its potential returns per unit of risk. Barrel Co is currently generating about -0.18 per unit of risk. If you would invest  111,400  in Shinyoung HappyTomorrow SPAC on February 5, 2024 and sell it today you would lose (5,900) from holding Shinyoung HappyTomorrow SPAC or give up 5.3% of portfolio value over 90 days.

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

Shinyoung HappyTomorrow SPAC  vs.  Barrel Co

Shinyoung HappyTomorrow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinyoung HappyTomorrow SPAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Barrel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrel Co 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 June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shinyoung HappyTomorrow and Barrel

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

The idea behind Shinyoung HappyTomorrow SPAC and Barrel 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.