Correlation Between Shinhan Inverse and System

Can any of the company-specific risk be diversified away by investing in both Shinhan Inverse and System 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 System 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 System and Application, you can compare the effects of market volatilities on Shinhan Inverse and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Inverse and System.

Diversification Opportunities for Shinhan Inverse and System

0.44

Correlation Coefficient

Shinhan Inverse  System

Very weak diversification

The 3 months correlation between Shinhan and System is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Silver and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and System go up and down completely randomly.

Pair Corralation between Shinhan Inverse and System

Assuming the 90 days trading horizon Shinhan Inverse Silver is expected to generate 1.04 times more return on investment than System. However, Shinhan Inverse is 1.04 times more volatile than System and Application. It trades about -0.07 of its potential returns per unit of risk. System and Application is currently generating about -0.12 per unit of risk. If you would invest  393,000  in Shinhan Inverse Silver on September 4, 2024 and sell it today you would lose (39,000) from holding Shinhan Inverse Silver or give up 9.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.61%
Values	Daily Returns

Shinhan Inverse Silver  vs.  System and Application

Shinhan Inverse Silver

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

System and Application

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days System and Application 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shinhan Inverse and System

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

The idea behind Shinhan Inverse Silver and System and Application 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.