Correlation Between Jeju Bank and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Jeju Bank and Shinhan WTI 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 Jeju Bank and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and Shinhan WTI Futures, you can compare the effects of market volatilities on Jeju Bank and Shinhan WTI 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 Jeju Bank with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Shinhan WTI.
Diversification Opportunities for Jeju Bank and Shinhan WTI
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jeju and Shinhan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures and Jeju Bank 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 Jeju Bank are associated (or correlated) with Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Jeju Bank i.e., Jeju Bank and Shinhan WTI go up and down completely randomly.
Pair Corralation between Jeju Bank and Shinhan WTI
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the Shinhan WTI. In addition to that, Jeju Bank is 1.72 times more volatile than Shinhan WTI Futures. It trades about -0.17 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about -0.08 per unit of volatility. If you would invest 730,500 in Shinhan WTI Futures on September 12, 2024 and sell it today you would lose (21,000) from holding Shinhan WTI Futures or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. Shinhan WTI Futures
Performance |
| Timeline |
| Jeju Bank |
| Shinhan WTI Futures |
Jeju Bank and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and Shinhan WTI
The main advantage of trading using opposite Jeju Bank and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank position performs unexpectedly, Shinhan WTI 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 WTI will offset losses from the drop in Shinhan WTI's long position.| Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. Samsung Electronics Co | Jeju Bank vs. SK Hynix | Jeju Bank vs. POSCO Holdings |
| Shinhan WTI vs. Shinhan Financial Group | Shinhan WTI vs. Cuckoo Homesys Co | Shinhan WTI vs. Jb Financial | Shinhan WTI vs. LG Household Healthcare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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