Correlation Between Shinhan WTI and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Shinhan WTI and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Namhwa Industrial.
Diversification Opportunities for Shinhan WTI and Namhwa Industrial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Namhwa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Shinhan WTI and Namhwa Industrial
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 1.36 times more return on investment than Namhwa Industrial. However, Shinhan WTI is 1.36 times more volatile than Namhwa Industrial Co. It trades about 0.02 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about -0.05 per unit of risk. If you would invest 672,000 in Shinhan WTI Futures on November 27, 2024 and sell it today you would earn a total of 82,000 from holding Shinhan WTI Futures or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Namhwa Industrial Co
Performance |
| Timeline |
| Shinhan WTI Futures |
| Namhwa Industrial |
Shinhan WTI and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Namhwa Industrial
The main advantage of trading using opposite Shinhan WTI and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial'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 |
| Namhwa Industrial vs. Kaonmedia Co | Namhwa Industrial vs. Nice Information Telecommunication | Namhwa Industrial vs. Lotte Data Communication | Namhwa Industrial vs. TJ media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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