Correlation Between Shinhan WTI and Poongsan
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Poongsan 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 Poongsan 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 Poongsan, you can compare the effects of market volatilities on Shinhan WTI and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Poongsan.
Diversification Opportunities for Shinhan WTI and Poongsan
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Poongsan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Poongsan go up and down completely randomly.
Pair Corralation between Shinhan WTI and Poongsan
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.84 times more return on investment than Poongsan. However, Shinhan WTI Futures is 1.19 times less risky than Poongsan. It trades about 0.04 of its potential returns per unit of risk. Poongsan is currently generating about 0.02 per unit of risk. If you would invest 775,000 in Shinhan WTI Futures on November 7, 2024 and sell it today you would earn a total of 8,500 from holding Shinhan WTI Futures or generate 1.1% 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. Poongsan
Performance |
| Timeline |
| Shinhan WTI Futures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Poongsan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinhan WTI and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Poongsan
The main advantage of trading using opposite Shinhan WTI and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| Shinhan WTI vs. Next Entertainment World | Shinhan WTI vs. Eagle Veterinary Technology | Shinhan WTI vs. Narae Nanotech Corp | Shinhan WTI vs. Barunson Entertainment Arts |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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