Correlation Between National Plastic and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both National Plastic and Shinhan Inverse 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 National Plastic and Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and Shinhan Inverse WTI, you can compare the effects of market volatilities on National Plastic and Shinhan Inverse 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 National Plastic with a short position of Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Shinhan Inverse.
Diversification Opportunities for National Plastic and Shinhan Inverse
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Shinhan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Shinhan Inverse WTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse WTI and National Plastic 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 National Plastic Co are associated (or correlated) with Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse WTI has no effect on the direction of National Plastic i.e., National Plastic and Shinhan Inverse go up and down completely randomly.
Pair Corralation between National Plastic and Shinhan Inverse
Assuming the 90 days trading horizon National Plastic Co is expected to under-perform the Shinhan Inverse. But the stock apears to be less risky and, when comparing its historical volatility, National Plastic Co is 1.06 times less risky than Shinhan Inverse. The stock trades about -0.11 of its potential returns per unit of risk. The Shinhan Inverse WTI is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 283,000 in Shinhan Inverse WTI on August 29, 2024 and sell it today you would lose (4,500) from holding Shinhan Inverse WTI or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. Shinhan Inverse WTI
Performance |
| Timeline |
| National Plastic |
| Shinhan Inverse WTI |
National Plastic and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and Shinhan Inverse
The main advantage of trading using opposite National Plastic and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Shinhan Inverse 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 Shinhan Inverse will offset losses from the drop in Shinhan Inverse's long position.| National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Shinhan WTI Futures | National Plastic vs. Finebesteel |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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