Correlation Between Formetal and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both Formetal 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 Formetal and Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Shinhan Inverse Silver, you can compare the effects of market volatilities on Formetal 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 Formetal with a short position of Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Shinhan Inverse.
Diversification Opportunities for Formetal and Shinhan Inverse
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Formetal and Shinhan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Shinhan Inverse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Silver and Formetal 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 Formetal Co 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 Silver has no effect on the direction of Formetal i.e., Formetal and Shinhan Inverse go up and down completely randomly.
Pair Corralation between Formetal and Shinhan Inverse
Assuming the 90 days trading horizon Formetal Co is expected to generate 2.9 times more return on investment than Shinhan Inverse. However, Formetal is 2.9 times more volatile than Shinhan Inverse Silver. It trades about 0.23 of its potential returns per unit of risk. Shinhan Inverse Silver is currently generating about -0.12 per unit of risk. If you would invest 267,500 in Formetal Co on September 14, 2024 and sell it today you would earn a total of 71,000 from holding Formetal Co or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Shinhan Inverse Silver
Performance |
| Timeline |
| Formetal |
| Shinhan Inverse Silver |
Formetal and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Shinhan Inverse
The main advantage of trading using opposite Formetal and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal 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.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
| Shinhan Inverse vs. PJ Metal Co | Shinhan Inverse vs. Polaris Office Corp | Shinhan Inverse vs. Sempio Foods Co | Shinhan Inverse 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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