Correlation Between Shinhan WTI and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Shinhan WTI and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and SEOJEON ELECTRIC.
Diversification Opportunities for Shinhan WTI and SEOJEON ELECTRIC
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinhan and SEOJEON is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Shinhan WTI and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to under-perform the SEOJEON ELECTRIC. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan WTI Futures is 2.21 times less risky than SEOJEON ELECTRIC. The stock trades about -0.01 of its potential returns per unit of risk. The SEOJEON ELECTRIC MACHINERY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 477,000 in SEOJEON ELECTRIC MACHINERY on September 26, 2024 and sell it today you would lose (74,500) from holding SEOJEON ELECTRIC MACHINERY or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.34% |
| Values | Daily Returns |
Shinhan WTI Futures vs. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Shinhan WTI Futures |
| SEOJEON ELECTRIC MAC |
Shinhan WTI and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and SEOJEON ELECTRIC
The main advantage of trading using opposite Shinhan WTI and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC'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 |
| SEOJEON ELECTRIC vs. Busan Industrial Co | SEOJEON ELECTRIC vs. Busan Ind | SEOJEON ELECTRIC vs. Mirae Asset Daewoo | SEOJEON ELECTRIC vs. Shinhan WTI Futures |
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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