Correlation Between Shinhan SOL and Shinhan Copper
Can any of the company-specific risk be diversified away by investing in both Shinhan SOL and Shinhan Copper 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 Shinhan SOL and Shinhan Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan SOL KRX300 and Shinhan Copper Futures, you can compare the effects of market volatilities on Shinhan SOL and Shinhan Copper 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 Shinhan SOL with a short position of Shinhan Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan SOL and Shinhan Copper.
Diversification Opportunities for Shinhan SOL and Shinhan Copper
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and Shinhan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan SOL KRX300 and Shinhan Copper Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Copper Futures and Shinhan SOL 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 Shinhan SOL KRX300 are associated (or correlated) with Shinhan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Copper Futures has no effect on the direction of Shinhan SOL i.e., Shinhan SOL and Shinhan Copper go up and down completely randomly.
Pair Corralation between Shinhan SOL and Shinhan Copper
Assuming the 90 days trading horizon Shinhan SOL KRX300 is expected to generate 1.4 times more return on investment than Shinhan Copper. However, Shinhan SOL is 1.4 times more volatile than Shinhan Copper Futures. It trades about 0.14 of its potential returns per unit of risk. Shinhan Copper Futures is currently generating about -0.23 per unit of risk. If you would invest 1,508,000 in Shinhan SOL KRX300 on October 9, 2024 and sell it today you would earn a total of 46,500 from holding Shinhan SOL KRX300 or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan SOL KRX300 vs. Shinhan Copper Futures
Performance |
| Timeline |
| Shinhan SOL KRX300 |
| Shinhan Copper Futures |
Shinhan SOL and Shinhan Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan SOL and Shinhan Copper
The main advantage of trading using opposite Shinhan SOL and Shinhan Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan SOL position performs unexpectedly, Shinhan Copper 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 Copper will offset losses from the drop in Shinhan Copper's long position.| Shinhan SOL vs. Busan Industrial Co | Shinhan SOL vs. Busan Ind | Shinhan SOL vs. Mirae Asset Daewoo | Shinhan SOL vs. UNISEM Co |
| Shinhan Copper vs. Busan Industrial Co | Shinhan Copper vs. Busan Ind | Shinhan Copper vs. Mirae Asset Daewoo | Shinhan Copper vs. UNISEM Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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