Correlation Between INFINITT Healthcare and Shin Steel
Can any of the company-specific risk be diversified away by investing in both INFINITT Healthcare and Shin Steel 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 INFINITT Healthcare and Shin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFINITT Healthcare Co and Shin Steel Co, you can compare the effects of market volatilities on INFINITT Healthcare and Shin Steel 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 INFINITT Healthcare with a short position of Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFINITT Healthcare and Shin Steel.
Diversification Opportunities for INFINITT Healthcare and Shin Steel
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between INFINITT and Shin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding INFINITT Healthcare Co and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel and INFINITT Healthcare 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 INFINITT Healthcare Co are associated (or correlated) with Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of INFINITT Healthcare i.e., INFINITT Healthcare and Shin Steel go up and down completely randomly.
Pair Corralation between INFINITT Healthcare and Shin Steel
Assuming the 90 days trading horizon INFINITT Healthcare Co is expected to generate 0.65 times more return on investment than Shin Steel. However, INFINITT Healthcare Co is 1.55 times less risky than Shin Steel. It trades about -0.02 of its potential returns per unit of risk. Shin Steel Co is currently generating about -0.03 per unit of risk. If you would invest 449,500 in INFINITT Healthcare Co on October 26, 2024 and sell it today you would lose (9,000) from holding INFINITT Healthcare Co or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFINITT Healthcare Co vs. Shin Steel Co
Performance |
| Timeline |
| INFINITT Healthcare |
| Shin Steel |
INFINITT Healthcare and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFINITT Healthcare and Shin Steel
The main advantage of trading using opposite INFINITT Healthcare and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFINITT Healthcare position performs unexpectedly, Shin Steel 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 Shin Steel will offset losses from the drop in Shin Steel's long position.The idea behind INFINITT Healthcare Co and Shin Steel Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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