Correlation Between Moadata Co and Shinhan WTI

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Can any of the company-specific risk be diversified away by investing in both Moadata Co 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 Moadata Co and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moadata Co and Shinhan WTI Futures, you can compare the effects of market volatilities on Moadata Co 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 Moadata Co with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moadata Co and Shinhan WTI.

Diversification Opportunities for Moadata Co and Shinhan WTI

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Moadata and Shinhan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Moadata 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 Moadata Co 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 Moadata 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 Moadata Co i.e., Moadata Co and Shinhan WTI go up and down completely randomly.

Pair Corralation between Moadata Co and Shinhan WTI

Assuming the 90 days trading horizon Moadata Co is expected to under-perform the Shinhan WTI. In addition to that, Moadata Co is 2.71 times more volatile than Shinhan WTI Futures. It trades about -0.3 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about -0.08 per unit of volatility. If you would invest  730,500  in Shinhan WTI Futures on September 12, 2024 and sell it today you would lose (21,000) from holding Shinhan WTI Futures or give up 2.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Moadata Co  vs.  Shinhan WTI Futures

 Performance 
       Timeline  
Moadata Co 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Moadata Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Shinhan WTI Futures 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan WTI Futures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinhan WTI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moadata Co and Shinhan WTI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Moadata Co and Shinhan WTI

The main advantage of trading using opposite Moadata Co and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata Co 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.
The idea behind Moadata Co and Shinhan WTI Futures 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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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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