Correlation Between Shinhan WTI and Korea New
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Korea New 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 Korea New 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 Korea New Network, you can compare the effects of market volatilities on Shinhan WTI and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Korea New.
Diversification Opportunities for Shinhan WTI and Korea New
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and Korea is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Korea New go up and down completely randomly.
Pair Corralation between Shinhan WTI and Korea New
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.79 times more return on investment than Korea New. However, Shinhan WTI Futures is 1.27 times less risky than Korea New. It trades about 0.03 of its potential returns per unit of risk. Korea New Network is currently generating about -0.01 per unit of risk. If you would invest 636,500 in Shinhan WTI Futures on August 27, 2024 and sell it today you would earn a total of 96,000 from holding Shinhan WTI Futures or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.61% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Korea New Network
Performance |
| Timeline |
| Shinhan WTI Futures |
| Korea New Network |
Shinhan WTI and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Korea New
The main advantage of trading using opposite Shinhan WTI and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New'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 |
| Korea New vs. Samsung Electronics Co | Korea New vs. Samsung Electronics Co | Korea New vs. LG Energy Solution | Korea New vs. SK Hynix |
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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