Correlation Between Shinhan BNP and Shinhan Copper
Can any of the company-specific risk be diversified away by investing in both Shinhan BNP 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 BNP 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 BNP Paribas and Shinhan Copper Futures, you can compare the effects of market volatilities on Shinhan BNP 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 BNP with a short position of Shinhan Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan BNP and Shinhan Copper.
Diversification Opportunities for Shinhan BNP and Shinhan Copper
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Shinhan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan BNP Paribas 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 BNP 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 BNP Paribas 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 BNP i.e., Shinhan BNP and Shinhan Copper go up and down completely randomly.
Pair Corralation between Shinhan BNP and Shinhan Copper
Assuming the 90 days trading horizon Shinhan BNP is expected to generate 1.18 times less return on investment than Shinhan Copper. But when comparing it to its historical volatility, Shinhan BNP Paribas is 1.69 times less risky than Shinhan Copper. It trades about 0.25 of its potential returns per unit of risk. Shinhan Copper Futures is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,856,000 in Shinhan Copper Futures on October 24, 2024 and sell it today you would earn a total of 84,000 from holding Shinhan Copper Futures or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan BNP Paribas vs. Shinhan Copper Futures
Performance |
| Timeline |
| Shinhan BNP Paribas |
| Shinhan Copper Futures |
Shinhan BNP and Shinhan Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan BNP and Shinhan Copper
The main advantage of trading using opposite Shinhan BNP and Shinhan Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan BNP 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 BNP vs. Shinhan Inverse Dollar | Shinhan BNP vs. Shinhan Copper Futures | Shinhan BNP vs. Shinhan Gold Futures | Shinhan BNP vs. Shinhan SOL KRX300 |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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