Correlation Between Shinhan WTI and Total Soft
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Total Soft 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 Total Soft 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 Total Soft Bank, you can compare the effects of market volatilities on Shinhan WTI and Total Soft 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 Total Soft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Total Soft.
Diversification Opportunities for Shinhan WTI and Total Soft
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and Total is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Total Soft Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Soft Bank 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 Total Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Soft Bank has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Total Soft go up and down completely randomly.
Pair Corralation between Shinhan WTI and Total Soft
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to under-perform the Total Soft. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan WTI Futures is 2.06 times less risky than Total Soft. The stock trades about -0.13 of its potential returns per unit of risk. The Total Soft Bank is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 726,000 in Total Soft Bank on November 27, 2024 and sell it today you would earn a total of 133,000 from holding Total Soft Bank or generate 18.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Total Soft Bank
Performance |
| Timeline |
| Shinhan WTI Futures |
| Total Soft Bank |
Shinhan WTI and Total Soft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Total Soft
The main advantage of trading using opposite Shinhan WTI and Total Soft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Total Soft 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 Total Soft will offset losses from the drop in Total Soft's 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 |
| Total Soft vs. Lotte Energy Materials | Total Soft vs. Korea Information Communications | Total Soft vs. Daishin Information Communications | Total Soft vs. Union Materials Corp |
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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