Correlation Between Shinhan WTI and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Samsung Electronics 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 WTI and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan WTI Futures and Samsung Electronics Co, you can compare the effects of market volatilities on Shinhan WTI and Samsung Electronics 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 WTI with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Samsung Electronics.
Diversification Opportunities for Shinhan WTI and Samsung Electronics
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and Samsung is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Shinhan WTI 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 WTI Futures are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Samsung Electronics go up and down completely randomly.
Pair Corralation between Shinhan WTI and Samsung Electronics
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.58 times more return on investment than Samsung Electronics. However, Shinhan WTI Futures is 1.73 times less risky than Samsung Electronics. It trades about 0.06 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 702,000 in Shinhan WTI Futures on August 31, 2024 and sell it today you would earn a total of 13,000 from holding Shinhan WTI Futures or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Samsung Electronics Co
Performance |
| Timeline |
| Shinhan WTI Futures |
| Samsung Electronics |
Shinhan WTI and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Samsung Electronics
The main advantage of trading using opposite Shinhan WTI and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Shinhan WTI vs. Daejung Chemicals Metals | Shinhan WTI vs. Sempio Foods Co | Shinhan WTI vs. CJ Seafood Corp | Shinhan WTI vs. Duksan Hi Metal |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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