Correlation Between HYBE and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both HYBE 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 HYBE and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYBE Co and Shinhan WTI Futures, you can compare the effects of market volatilities on HYBE 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 HYBE with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYBE and Shinhan WTI.
Diversification Opportunities for HYBE and Shinhan WTI
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HYBE and Shinhan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HYBE 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 HYBE 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 HYBE 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 HYBE i.e., HYBE and Shinhan WTI go up and down completely randomly.
Pair Corralation between HYBE and Shinhan WTI
Assuming the 90 days trading horizon HYBE Co is expected to under-perform the Shinhan WTI. In addition to that, HYBE is 1.36 times more volatile than Shinhan WTI Futures. It trades about -0.03 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.03 per unit of volatility. If you would invest 665,500 in Shinhan WTI Futures on September 4, 2024 and sell it today you would earn a total of 49,500 from holding Shinhan WTI Futures or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.91% |
| Values | Daily Returns |
HYBE Co vs. Shinhan WTI Futures
Performance |
| Timeline |
| HYBE |
| Shinhan WTI Futures |
HYBE and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYBE and Shinhan WTI
The main advantage of trading using opposite HYBE and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYBE 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 HYBE 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.| Shinhan WTI vs. DB Financial Investment | Shinhan WTI vs. Total Soft Bank | Shinhan WTI vs. Moadata Co | Shinhan WTI vs. Jeju Bank |
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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