Correlation Between Shinhan BNP and Shinhan Leverage
Can any of the company-specific risk be diversified away by investing in both Shinhan BNP and Shinhan Leverage 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 Leverage 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 Leverage WTI, you can compare the effects of market volatilities on Shinhan BNP and Shinhan Leverage 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 Leverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan BNP and Shinhan Leverage.
Diversification Opportunities for Shinhan BNP and Shinhan Leverage
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and Shinhan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan BNP Paribas and Shinhan Leverage WTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Leverage WTI 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 Leverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Leverage WTI has no effect on the direction of Shinhan BNP i.e., Shinhan BNP and Shinhan Leverage go up and down completely randomly.
Pair Corralation between Shinhan BNP and Shinhan Leverage
Assuming the 90 days trading horizon Shinhan BNP is expected to generate 7.15 times less return on investment than Shinhan Leverage. But when comparing it to its historical volatility, Shinhan BNP Paribas is 3.82 times less risky than Shinhan Leverage. It trades about 0.25 of its potential returns per unit of risk. Shinhan Leverage WTI is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 91,400 in Shinhan Leverage WTI on October 22, 2024 and sell it today you would earn a total of 26,400 from holding Shinhan Leverage WTI or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Shinhan BNP Paribas vs. Shinhan Leverage WTI
Performance |
| Timeline |
| Shinhan BNP Paribas |
| Shinhan Leverage WTI |
Shinhan BNP and Shinhan Leverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan BNP and Shinhan Leverage
The main advantage of trading using opposite Shinhan BNP and Shinhan Leverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan BNP position performs unexpectedly, Shinhan Leverage 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 Leverage will offset losses from the drop in Shinhan Leverage'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 |
| Shinhan Leverage vs. Shinhan Inverse Dollar | Shinhan Leverage vs. Shinhan BNP Paribas | Shinhan Leverage vs. Shinhan Copper Futures | Shinhan Leverage vs. Shinhan Gold Futures |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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