Correlation Between ICD and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both ICD 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 ICD and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and Shinhan WTI Futures, you can compare the effects of market volatilities on ICD 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 ICD with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and Shinhan WTI.
Diversification Opportunities for ICD and Shinhan WTI
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICD and Shinhan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co 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 ICD 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 ICD Co 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 ICD i.e., ICD and Shinhan WTI go up and down completely randomly.
Pair Corralation between ICD and Shinhan WTI
Assuming the 90 days trading horizon ICD Co is expected to under-perform the Shinhan WTI. In addition to that, ICD is 1.41 times more volatile than Shinhan WTI Futures. It trades about -0.28 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about -0.07 per unit of volatility. If you would invest 740,000 in Shinhan WTI Futures on August 24, 2024 and sell it today you would lose (21,500) from holding Shinhan WTI Futures or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ICD Co vs. Shinhan WTI Futures
Performance |
| Timeline |
| ICD Co |
| Shinhan WTI Futures |
ICD and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD and Shinhan WTI
The main advantage of trading using opposite ICD and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD 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.| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
| Shinhan WTI vs. Youngbo Chemical Co | Shinhan WTI vs. Tway Air Co | Shinhan WTI vs. Korea Petro Chemical | Shinhan WTI vs. CJ Seafood Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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