Correlation Between Shinhan WTI and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and INSUN Environmental 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 INSUN Environmental 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 INSUN Environmental New, you can compare the effects of market volatilities on Shinhan WTI and INSUN Environmental 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 INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and INSUN Environmental.
Diversification Opportunities for Shinhan WTI and INSUN Environmental
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and INSUN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New 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 INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and INSUN Environmental go up and down completely randomly.
Pair Corralation between Shinhan WTI and INSUN Environmental
Assuming the 90 days trading horizon Shinhan WTI is expected to generate 2.3 times less return on investment than INSUN Environmental. But when comparing it to its historical volatility, Shinhan WTI Futures is 1.53 times less risky than INSUN Environmental. It trades about 0.29 of its potential returns per unit of risk. INSUN Environmental New is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 491,500 in INSUN Environmental New on October 13, 2024 and sell it today you would earn a total of 78,500 from holding INSUN Environmental New or generate 15.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. INSUN Environmental New
Performance |
| Timeline |
| Shinhan WTI Futures |
| INSUN Environmental New |
Shinhan WTI and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and INSUN Environmental
The main advantage of trading using opposite Shinhan WTI and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental's long position.| Shinhan WTI vs. Kyung In Synthetic Corp | Shinhan WTI vs. Sung Bo Chemicals | Shinhan WTI vs. Hanwha Chemical Corp | Shinhan WTI vs. KPX Green Chemical |
| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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