Correlation Between System and Shinhan Inverse

Can any of the company-specific risk be diversified away by investing in both System and Shinhan Inverse 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 System and Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between System and Application and Shinhan Inverse Copper, you can compare the effects of market volatilities on System and Shinhan Inverse 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 System with a short position of Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Shinhan Inverse.

Diversification Opportunities for System and Shinhan Inverse

0.12

Correlation Coefficient

System  Shinhan Inverse

Average diversification

The 3 months correlation between System and Shinhan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Shinhan Inverse Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Copper and System 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 System and Application are associated (or correlated) with Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Copper has no effect on the direction of System i.e., System and Shinhan Inverse go up and down completely randomly.

Pair Corralation between System and Shinhan Inverse

Assuming the 90 days trading horizon System and Application is expected to under-perform the Shinhan Inverse. In addition to that, System is 2.44 times more volatile than Shinhan Inverse Copper. It trades about 0.0 of its total potential returns per unit of risk. Shinhan Inverse Copper is currently generating about 0.02 per unit of volatility. If you would invest  520,500  in Shinhan Inverse Copper on October 11, 2024 and sell it today you would earn a total of  39,000  from holding Shinhan Inverse Copper or generate 7.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.42%
Values	Daily Returns

System and Application  vs.  Shinhan Inverse Copper

System and Application

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in System and Application are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, System may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shinhan Inverse Copper

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Copper are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinhan Inverse may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with System and Shinhan Inverse

The main advantage of trading using opposite System and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Shinhan Inverse 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 Inverse will offset losses from the drop in Shinhan Inverse's long position.

The idea behind System and Application and Shinhan Inverse Copper 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.