Correlation Between Shinhan WTI and Polaris Office
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Polaris Office 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 Polaris Office 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 Polaris Office Corp, you can compare the effects of market volatilities on Shinhan WTI and Polaris Office 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 Polaris Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Polaris Office.
Diversification Opportunities for Shinhan WTI and Polaris Office
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Polaris is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Polaris Office Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Office Corp 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 Polaris Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Office Corp has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Polaris Office go up and down completely randomly.
Pair Corralation between Shinhan WTI and Polaris Office
Assuming the 90 days trading horizon Shinhan WTI is expected to generate 7.58 times less return on investment than Polaris Office. But when comparing it to its historical volatility, Shinhan WTI Futures is 2.61 times less risky than Polaris Office. It trades about 0.06 of its potential returns per unit of risk. Polaris Office Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 506,000 in Polaris Office Corp on August 29, 2024 and sell it today you would earn a total of 79,000 from holding Polaris Office Corp or generate 15.61% 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. Polaris Office Corp
Performance |
| Timeline |
| Shinhan WTI Futures |
| Polaris Office Corp |
Shinhan WTI and Polaris Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Polaris Office
The main advantage of trading using opposite Shinhan WTI and Polaris Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Polaris Office 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 Polaris Office will offset losses from the drop in Polaris Office's 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 |
| Polaris Office vs. Daou Data Corp | Polaris Office vs. Busan Industrial Co | Polaris Office vs. Busan Ind | Polaris Office 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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