Correlation Between Apple and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Apple and Shinhan WTI 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 Apple and Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Shinhan WTI Futures, you can compare the effects of market volatilities on Apple and Shinhan WTI 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 Apple with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Shinhan WTI.
Diversification Opportunities for Apple and Shinhan WTI
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and Shinhan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures and Apple 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 Apple Inc are associated (or correlated) with Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Apple i.e., Apple and Shinhan WTI go up and down completely randomly.
Pair Corralation between Apple and Shinhan WTI
Given the investment horizon of 90 days Apple Inc is expected to generate 0.7 times more return on investment than Shinhan WTI. However, Apple Inc is 1.42 times less risky than Shinhan WTI. It trades about 0.07 of its potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.03 per unit of risk. If you would invest 14,925 in Apple Inc on October 24, 2024 and sell it today you would earn a total of 7,328 from holding Apple Inc or generate 49.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.76% |
| Values | Daily Returns |
Apple Inc vs. Shinhan WTI Futures
Performance |
| Timeline |
| Apple Inc |
| Shinhan WTI Futures |
Apple and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Shinhan WTI
The main advantage of trading using opposite Apple and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI's long position.The idea behind Apple Inc and Shinhan WTI Futures pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Shinhan WTI vs. Adaptive Plasma Technology | Shinhan WTI vs. Sewoon Medical Co | Shinhan WTI vs. Green Cross Medical | Shinhan WTI vs. Ilji Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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