Correlation Between Nature and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both Nature 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 Nature and Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nature and Environment and Shinhan Inverse WTI, you can compare the effects of market volatilities on Nature 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 Nature with a short position of Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nature and Shinhan Inverse.
Diversification Opportunities for Nature and Shinhan Inverse
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nature and Shinhan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nature and Environment 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 Nature 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 Nature and Environment 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 Nature i.e., Nature and Shinhan Inverse go up and down completely randomly.
Pair Corralation between Nature and Shinhan Inverse
Assuming the 90 days trading horizon Nature and Environment is expected to generate 1.86 times more return on investment than Shinhan Inverse. However, Nature is 1.86 times more volatile than Shinhan Inverse WTI. It trades about 0.07 of its potential returns per unit of risk. Shinhan Inverse WTI is currently generating about 0.06 per unit of risk. If you would invest 59,200 in Nature and Environment on September 3, 2024 and sell it today you would earn a total of 1,800 from holding Nature and Environment or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nature and Environment vs. Shinhan Inverse WTI
Performance |
| Timeline |
| Nature and Environment |
| Shinhan Inverse WTI |
Nature and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nature and Shinhan Inverse
The main advantage of trading using opposite Nature and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nature 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.| Nature vs. Sung Bo Chemicals | Nature vs. LB Investment | Nature vs. Seoul Food Industrial | Nature vs. Haitai Confectionery Foods |
| Shinhan Inverse vs. Kukdo Chemical Co | Shinhan Inverse vs. Korea Petro Chemical | Shinhan Inverse vs. LG Chemicals | Shinhan Inverse vs. Daehan Synthetic Fiber |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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