Correlation Between V One and Shinhan WTI

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

By analyzing existing cross correlation between V One Tech Co and Shinhan WTI Futures, you can compare the effects of market volatilities on V One 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 V One with a short position of Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of V One and Shinhan WTI.

Diversification Opportunities for V One and Shinhan WTI

0.83

Correlation Coefficient

V One  Shinhan WTI

Very poor diversification

The 3 months correlation between 251630 and Shinhan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding V One Tech Co 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 V One 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 V One Tech Co 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 V One i.e., V One and Shinhan WTI go up and down completely randomly.

Pair Corralation between V One and Shinhan WTI

Assuming the 90 days trading horizon V One Tech Co is expected to under-perform the Shinhan WTI. In addition to that, V One is 1.68 times more volatile than Shinhan WTI Futures. It trades about -0.01 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.03 per unit of volatility. If you would invest  666,000  in Shinhan WTI Futures on October 24, 2024 and sell it today you would earn a total of  140,000  from holding Shinhan WTI Futures or generate 21.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.96%
Values	Daily Returns

V One Tech Co  vs.  Shinhan WTI Futures

V One Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in V One Tech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V One sustained solid returns over the last few months and may actually be approaching a breakup point.

Shinhan WTI Futures

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan WTI Futures are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinhan WTI may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with V One and Shinhan WTI

The main advantage of trading using opposite V One and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V One 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 V One Tech Co 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.