Correlation Between Shinhan Inverse and Shinhan SOL
Can any of the company-specific risk be diversified away by investing in both Shinhan Inverse and Shinhan SOL 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 Shinhan SOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Inverse Dollar and Shinhan SOL KRX300, you can compare the effects of market volatilities on Shinhan Inverse and Shinhan SOL 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 Shinhan SOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Inverse and Shinhan SOL.
Diversification Opportunities for Shinhan Inverse and Shinhan SOL
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and Shinhan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Dollar and Shinhan SOL KRX300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan SOL KRX300 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 Dollar are associated (or correlated) with Shinhan SOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan SOL KRX300 has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and Shinhan SOL go up and down completely randomly.
Pair Corralation between Shinhan Inverse and Shinhan SOL
Assuming the 90 days trading horizon Shinhan Inverse is expected to generate 2.02 times less return on investment than Shinhan SOL. But when comparing it to its historical volatility, Shinhan Inverse Dollar is 1.72 times less risky than Shinhan SOL. It trades about 0.18 of its potential returns per unit of risk. Shinhan SOL KRX300 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,550,569 in Shinhan SOL KRX300 on November 4, 2024 and sell it today you would earn a total of 45,931 from holding Shinhan SOL KRX300 or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Inverse Dollar vs. Shinhan SOL KRX300
Performance |
| Timeline |
| Shinhan Inverse Dollar |
| Shinhan SOL KRX300 |
Shinhan Inverse and Shinhan SOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Inverse and Shinhan SOL
The main advantage of trading using opposite Shinhan Inverse and Shinhan SOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Inverse position performs unexpectedly, Shinhan SOL 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 SOL will offset losses from the drop in Shinhan SOL's long position.| Shinhan Inverse vs. 453950 | Shinhan Inverse vs. Busan Industrial Co | Shinhan Inverse vs. Busan Ind | Shinhan Inverse vs. Mirae Asset Daewoo |
| Shinhan SOL vs. 453950 | Shinhan SOL vs. Busan Industrial Co | Shinhan SOL vs. Busan Ind | Shinhan SOL vs. Mirae Asset Daewoo |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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