Correlation Between Shinhan Inverse and KT Hitel

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

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

Diversification Opportunities for Shinhan Inverse and KT Hitel

-0.58

Correlation Coefficient

Shinhan Inverse  KT Hitel

Excellent diversification

The 3 months correlation between Shinhan and 036030 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Silver and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel and Shinhan Inverse 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 Inverse Silver are associated (or correlated) with KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and KT Hitel go up and down completely randomly.

Pair Corralation between Shinhan Inverse and KT Hitel

Assuming the 90 days trading horizon Shinhan Inverse Silver is expected to under-perform the KT Hitel. In addition to that, Shinhan Inverse is 1.25 times more volatile than KT Hitel. It trades about -0.16 of its total potential returns per unit of risk. KT Hitel is currently generating about 0.06 per unit of volatility. If you would invest  352,000  in KT Hitel on December 30, 2024 and sell it today you would earn a total of  13,500  from holding KT Hitel or generate 3.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shinhan Inverse Silver  vs.  KT Hitel

Shinhan Inverse Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinhan Inverse Silver 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KT Hitel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KT Hitel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinhan Inverse and KT Hitel

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

The idea behind Shinhan Inverse Silver and KT Hitel 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.