Correlation Between Shinhan WTI and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Sungdo Engineering 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 Sungdo Engineering 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 Sungdo Engineering Construction, you can compare the effects of market volatilities on Shinhan WTI and Sungdo Engineering 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 Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Sungdo Engineering.
Diversification Opportunities for Shinhan WTI and Sungdo Engineering
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and Sungdo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering 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 Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Shinhan WTI and Sungdo Engineering
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to under-perform the Sungdo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan WTI Futures is 2.0 times less risky than Sungdo Engineering. The stock trades about -0.03 of its potential returns per unit of risk. The Sungdo Engineering Construction is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 469,000 in Sungdo Engineering Construction on September 27, 2024 and sell it today you would earn a total of 16,500 from holding Sungdo Engineering Construction or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.52% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Shinhan WTI Futures |
| Sungdo Engineering |
Shinhan WTI and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Sungdo Engineering
The main advantage of trading using opposite Shinhan WTI and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering'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 |
| Sungdo Engineering vs. Busan Industrial Co | Sungdo Engineering vs. Busan Ind | Sungdo Engineering vs. Mirae Asset Daewoo | Sungdo Engineering 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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