Correlation Between Shinhan Inverse and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Shinhan Inverse and INNOX Advanced 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 Inverse and INNOX Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Inverse Copper and INNOX Advanced Materials, you can compare the effects of market volatilities on Shinhan Inverse and INNOX Advanced 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 Inverse with a short position of INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Inverse and INNOX Advanced.
Diversification Opportunities for Shinhan Inverse and INNOX Advanced
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and INNOX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Copper and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials and Shinhan Inverse 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 Inverse Copper are associated (or correlated) with INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and INNOX Advanced go up and down completely randomly.
Pair Corralation between Shinhan Inverse and INNOX Advanced
Assuming the 90 days trading horizon Shinhan Inverse Copper is expected to under-perform the INNOX Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Inverse Copper is 2.47 times less risky than INNOX Advanced. The stock trades about -0.21 of its potential returns per unit of risk. The INNOX Advanced Materials is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 2,054,747 in INNOX Advanced Materials on October 23, 2024 and sell it today you would earn a total of 715,253 from holding INNOX Advanced Materials or generate 34.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Shinhan Inverse Copper vs. INNOX Advanced Materials
Performance |
| Timeline |
| Shinhan Inverse Copper |
| INNOX Advanced Materials |
Shinhan Inverse and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Inverse and INNOX Advanced
The main advantage of trading using opposite Shinhan Inverse and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Inverse position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Shinhan Inverse vs. Bookook Steel | Shinhan Inverse vs. SungMoon Electronics Co | Shinhan Inverse vs. Mirai Semiconductors Co | Shinhan Inverse vs. BooKook Steel Co |
| INNOX Advanced vs. Alton Sports CoLtd | INNOX Advanced vs. Sangsin Energy Display | INNOX Advanced vs. RF Materials Co | INNOX Advanced vs. Daejoo Electronic Materials |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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