Correlation Between Shinhan WTI and Doosan Fuel
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and Doosan Fuel 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 Doosan Fuel 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 Doosan Fuel Cell, you can compare the effects of market volatilities on Shinhan WTI and Doosan Fuel 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 Doosan Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and Doosan Fuel.
Diversification Opportunities for Shinhan WTI and Doosan Fuel
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and Doosan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Doosan Fuel Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Fuel Cell 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 Doosan Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Fuel Cell has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Doosan Fuel go up and down completely randomly.
Pair Corralation between Shinhan WTI and Doosan Fuel
Assuming the 90 days trading horizon Shinhan WTI Futures is expected to generate 0.9 times more return on investment than Doosan Fuel. However, Shinhan WTI Futures is 1.11 times less risky than Doosan Fuel. It trades about 0.04 of its potential returns per unit of risk. Doosan Fuel Cell is currently generating about -0.29 per unit of risk. If you would invest 775,000 in Shinhan WTI Futures on November 6, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan WTI Futures vs. Doosan Fuel Cell
Performance |
| Timeline |
| Shinhan WTI Futures |
| Doosan Fuel Cell |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinhan WTI and Doosan Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and Doosan Fuel
The main advantage of trading using opposite Shinhan WTI and Doosan Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, Doosan Fuel 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 Doosan Fuel will offset losses from the drop in Doosan Fuel'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 |
| Doosan Fuel vs. Shinil Electronics Co | Doosan Fuel vs. Kakao Games Corp | Doosan Fuel vs. Green Cross Medical | Doosan Fuel vs. Aprogen Healthcare Games |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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