Correlation Between Shinhan WTI and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Hyundai Heavy 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 Hyundai Heavy 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 Hyundai Heavy Industries, you can compare the effects of market volatilities on Shinhan WTI and Hyundai Heavy 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 Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Hyundai Heavy.
Diversification Opportunities for Shinhan WTI and Hyundai Heavy
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shinhan and Hyundai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries 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 Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Shinhan WTI and Hyundai Heavy
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.81 times more return on investment than Hyundai Heavy. However, Shinhan WTI Futures is 1.23 times less risky than Hyundai Heavy. It trades about 0.03 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about -0.05 per unit of risk. If you would invest 716,000 in Shinhan WTI Futures on September 1, 2024 and sell it today you would earn a total of 5,500 from holding Shinhan WTI Futures or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Shinhan WTI Futures |
| Hyundai Heavy Industries |
Shinhan WTI and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Hyundai Heavy
The main advantage of trading using opposite Shinhan WTI and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Hyundai Heavy 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 Hyundai Heavy will offset losses from the drop in Hyundai Heavy's long position.| Shinhan WTI vs. Kaonmedia Co | Shinhan WTI vs. YG Entertainment | Shinhan WTI vs. Dongil Metal Co | Shinhan WTI vs. DONGKUK TED METAL |
| Hyundai Heavy vs. Union Materials Corp | Hyundai Heavy vs. Daejoo Electronic Materials | Hyundai Heavy vs. Ecoplastic | Hyundai Heavy vs. Netmarble Games Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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