Correlation Between Shinhan WTI and SK Holdings
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and SK Holdings 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 SK Holdings 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 SK Holdings Co, you can compare the effects of market volatilities on Shinhan WTI and SK Holdings 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 SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and SK Holdings.
Diversification Opportunities for Shinhan WTI and SK Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and 034730 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and SK Holdings go up and down completely randomly.
Pair Corralation between Shinhan WTI and SK Holdings
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.93 times more return on investment than SK Holdings. However, Shinhan WTI Futures is 1.07 times less risky than SK Holdings. It trades about -0.03 of its potential returns per unit of risk. SK Holdings Co is currently generating about -0.04 per unit of risk. If you would invest 809,000 in Shinhan WTI Futures on October 1, 2024 and sell it today you would lose (77,000) from holding Shinhan WTI Futures or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
Shinhan WTI Futures vs. SK Holdings Co
Performance |
| Timeline |
| Shinhan WTI Futures |
| SK Holdings |
Shinhan WTI and SK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and SK Holdings
The main advantage of trading using opposite Shinhan WTI and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, SK Holdings 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 SK Holdings will offset losses from the drop in SK Holdings' 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 |
| SK Holdings vs. Busan Industrial Co | SK Holdings vs. Busan Ind | SK Holdings vs. Mirae Asset Daewoo | SK Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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