Correlation Between Jeong Moon and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Jeong Moon 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 Jeong Moon and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeong Moon Information and Shinhan WTI Futures, you can compare the effects of market volatilities on Jeong Moon 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 Jeong Moon with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeong Moon and Shinhan WTI.
Diversification Opportunities for Jeong Moon and Shinhan WTI
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Jeong and Shinhan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information 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 Jeong Moon 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 Jeong Moon Information 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 Jeong Moon i.e., Jeong Moon and Shinhan WTI go up and down completely randomly.
Pair Corralation between Jeong Moon and Shinhan WTI
Assuming the 90 days trading horizon Jeong Moon Information is expected to under-perform the Shinhan WTI. But the stock apears to be less risky and, when comparing its historical volatility, Jeong Moon Information is 1.05 times less risky than Shinhan WTI. The stock trades about -0.21 of its potential returns per unit of risk. The Shinhan WTI Futures is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 732,500 in Shinhan WTI Futures on September 2, 2024 and sell it today you would lose (11,000) from holding Shinhan WTI Futures or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeong Moon Information vs. Shinhan WTI Futures
Performance |
| Timeline |
| Jeong Moon Information |
| Shinhan WTI Futures |
Jeong Moon and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeong Moon and Shinhan WTI
The main advantage of trading using opposite Jeong Moon and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeong Moon 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.| Jeong Moon vs. Dongsin Engineering Construction | Jeong Moon vs. Doosan Fuel Cell | Jeong Moon vs. Daishin Balance 1 | Jeong Moon vs. Total Soft Bank |
| Shinhan WTI vs. BNK Financial Group | Shinhan WTI vs. Dongbu Insurance Co | Shinhan WTI vs. KakaoBank Corp | Shinhan WTI vs. Korea Alcohol Industrial |
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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