Correlation Between Shinhan WTI and Korea Environment
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Korea Environment 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 Korea Environment 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 Korea Environment Technology, you can compare the effects of market volatilities on Shinhan WTI and Korea Environment 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 Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Korea Environment.
Diversification Opportunities for Shinhan WTI and Korea Environment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Korea is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment 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 Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Korea Environment go up and down completely randomly.
Pair Corralation between Shinhan WTI and Korea Environment
Assuming the 90 days trading horizon Shinhan WTI is expected to generate 1.09 times less return on investment than Korea Environment. But when comparing it to its historical volatility, Shinhan WTI Futures is 1.16 times less risky than Korea Environment. It trades about 0.28 of its potential returns per unit of risk. Korea Environment Technology is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 839,938 in Korea Environment Technology on October 15, 2024 and sell it today you would earn a total of 53,062 from holding Korea Environment Technology or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Korea Environment Technology
Performance |
| Timeline |
| Shinhan WTI Futures |
| Korea Environment |
Shinhan WTI and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Korea Environment
The main advantage of trading using opposite Shinhan WTI and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Korea Environment 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 Korea Environment will offset losses from the drop in Korea Environment's long position.| Shinhan WTI vs. Samsung Electronics Co | Shinhan WTI vs. Samsung Electronics Co | Shinhan WTI vs. LG Energy Solution | Shinhan WTI vs. SK Hynix |
| Korea Environment vs. INSUN Environmental New | Korea Environment vs. LEENO Industrial | Korea Environment vs. Kmw Inc | Korea Environment vs. NICE Information Service |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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