Correlation Between Shinhan WTI and DC Media
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and DC Media 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 DC Media 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 DC Media Co, you can compare the effects of market volatilities on Shinhan WTI and DC Media 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 DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and DC Media.
Diversification Opportunities for Shinhan WTI and DC Media
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and 263720 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media 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 DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and DC Media go up and down completely randomly.
Pair Corralation between Shinhan WTI and DC Media
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.47 times more return on investment than DC Media. However, Shinhan WTI Futures is 2.14 times less risky than DC Media. It trades about -0.02 of its potential returns per unit of risk. DC Media Co is currently generating about -0.28 per unit of risk. If you would invest 775,000 in Shinhan WTI Futures on November 7, 2024 and sell it today you would lose (7,000) from holding Shinhan WTI Futures or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. DC Media Co
Performance |
| Timeline |
| Shinhan WTI Futures |
| DC Media |
Shinhan WTI and DC Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and DC Media
The main advantage of trading using opposite Shinhan WTI and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, DC Media 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 DC Media will offset losses from the drop in DC Media's long position.| Shinhan WTI vs. LG Household Healthcare | Shinhan WTI vs. Lotte Data Communication | Shinhan WTI vs. Nice Information Telecommunication | Shinhan WTI vs. Jeong Moon Information |
| DC Media vs. FNSTech Co | DC Media vs. Ssangyong Information Communication | DC Media vs. Lion Chemtech Co | DC Media vs. Nable Communications |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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