Correlation Between Shinhan WTI and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Busan Industrial 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 Busan Industrial 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 Busan Industrial Co, you can compare the effects of market volatilities on Shinhan WTI and Busan Industrial 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Busan Industrial.
Diversification Opportunities for Shinhan WTI and Busan Industrial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Busan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Busan Industrial go up and down completely randomly.
Pair Corralation between Shinhan WTI and Busan Industrial
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.71 times more return on investment than Busan Industrial. However, Shinhan WTI Futures is 1.42 times less risky than Busan Industrial. It trades about 0.04 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.03 per unit of risk. If you would invest 775,000 in Shinhan WTI Futures on November 7, 2024 and sell it today you would earn a total of 8,500 from holding Shinhan WTI Futures or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Busan Industrial Co
Performance |
| Timeline |
| Shinhan WTI Futures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Busan Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Shinhan WTI and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Busan Industrial
The main advantage of trading using opposite Shinhan WTI and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Shinhan WTI vs. Next Entertainment World | Shinhan WTI vs. Eagle Veterinary Technology | Shinhan WTI vs. Narae Nanotech Corp | Shinhan WTI vs. Barunson Entertainment Arts |
| Busan Industrial vs. Raontech | Busan Industrial vs. V One Tech Co | Busan Industrial vs. A Tech Solution Co | Busan Industrial vs. Daehan Synthetic Fiber |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |