Correlation Between Duksan Hi and Shinhan Inverse

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

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

Diversification Opportunities for Duksan Hi and Shinhan Inverse

-0.3

Correlation Coefficient

Duksan Hi  Shinhan Inverse

Very good diversification

The 3 months correlation between Duksan and Shinhan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Duksan Hi Metal 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 Duksan Hi 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 Duksan Hi Metal 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 Duksan Hi i.e., Duksan Hi and Shinhan Inverse go up and down completely randomly.

Pair Corralation between Duksan Hi and Shinhan Inverse

Assuming the 90 days trading horizon Duksan Hi Metal is expected to under-perform the Shinhan Inverse. In addition to that, Duksan Hi is 1.84 times more volatile than Shinhan Inverse Copper. It trades about -0.21 of its total potential returns per unit of risk. Shinhan Inverse Copper is currently generating about 0.03 per unit of volatility. If you would invest  555,000  in Shinhan Inverse Copper on August 31, 2024 and sell it today you would earn a total of  11,500  from holding Shinhan Inverse Copper or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.83%
Values	Daily Returns

Duksan Hi Metal  vs.  Shinhan Inverse Copper

Duksan Hi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duksan Hi Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Shinhan Inverse Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Copper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinhan Inverse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Duksan Hi and Shinhan Inverse

The main advantage of trading using opposite Duksan Hi and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duksan Hi 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 Duksan Hi Metal 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.