Correlation Between Shinhan WTI and Stic Investments
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Stic Investments 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 Stic Investments 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 Stic Investments, you can compare the effects of market volatilities on Shinhan WTI and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Stic Investments.
Diversification Opportunities for Shinhan WTI and Stic Investments
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Stic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Stic Investments go up and down completely randomly.
Pair Corralation between Shinhan WTI and Stic Investments
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.84 times more return on investment than Stic Investments. However, Shinhan WTI Futures is 1.2 times less risky than Stic Investments. It trades about 0.06 of its potential returns per unit of risk. Stic Investments is currently generating about 0.02 per unit of risk. If you would invest 709,000 in Shinhan WTI Futures on August 29, 2024 and sell it today you would earn a total of 13,500 from holding Shinhan WTI Futures or generate 1.9% 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. Stic Investments
Performance |
| Timeline |
| Shinhan WTI Futures |
| Stic Investments |
Shinhan WTI and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Stic Investments
The main advantage of trading using opposite Shinhan WTI and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| Shinhan WTI vs. Lotte Chilsung Beverage | Shinhan WTI vs. Kukil Metal Co | Shinhan WTI vs. Kbi Metal Co | Shinhan WTI vs. PJ Metal Co |
| Stic Investments vs. Daou Data Corp | Stic Investments vs. Busan Industrial Co | Stic Investments vs. Busan Ind | Stic Investments vs. Shinhan WTI Futures |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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