Correlation Between Shinhan WTI and EO Technics
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and EO Technics 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 EO Technics 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 EO Technics Co, you can compare the effects of market volatilities on Shinhan WTI and EO Technics 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 EO Technics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and EO Technics.
Diversification Opportunities for Shinhan WTI and EO Technics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and 039030 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and EO Technics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EO Technics 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 EO Technics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EO Technics has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and EO Technics go up and down completely randomly.
Pair Corralation between Shinhan WTI and EO Technics
Assuming the 90 days trading horizon Shinhan WTI is expected to generate 5.61 times less return on investment than EO Technics. But when comparing it to its historical volatility, Shinhan WTI Futures is 2.19 times less risky than EO Technics. It trades about 0.02 of its potential returns per unit of risk. EO Technics Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,163,646 in EO Technics Co on November 27, 2024 and sell it today you would earn a total of 7,796,354 from holding EO Technics Co or generate 108.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.96% |
| Values | Daily Returns |
Shinhan WTI Futures vs. EO Technics Co
Performance |
| Timeline |
| Shinhan WTI Futures |
Risk-Adjusted Performance
OK
Weak | Strong |
| EO Technics |
Shinhan WTI and EO Technics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and EO Technics
The main advantage of trading using opposite Shinhan WTI and EO Technics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, EO Technics 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 EO Technics will offset losses from the drop in EO Technics' long position.| Shinhan WTI vs. Cots Technology Co | Shinhan WTI vs. Kukil Metal Co | Shinhan WTI vs. Daejung Chemicals Metals | Shinhan WTI vs. MS Autotech CoLtd |
| EO Technics vs. Koh Young Technology | EO Technics vs. SFA Engineering | EO Technics vs. LEENO Industrial | EO Technics vs. Dongjin Semichem Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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