Correlation Between Shinhan Inverse and PJ Metal

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

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

Diversification Opportunities for Shinhan Inverse and PJ Metal

-0.52

Correlation Coefficient

Shinhan Inverse  PJ Metal

Excellent diversification

The 3 months correlation between Shinhan and 128660 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Copper and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal 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 Copper are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and PJ Metal go up and down completely randomly.

Pair Corralation between Shinhan Inverse and PJ Metal

Assuming the 90 days trading horizon Shinhan Inverse Copper is expected to under-perform the PJ Metal. In addition to that, Shinhan Inverse is 2.53 times more volatile than PJ Metal Co. It trades about -0.23 of its total potential returns per unit of risk. PJ Metal Co is currently generating about 0.16 per unit of volatility. If you would invest  295,000  in PJ Metal Co on October 27, 2024 and sell it today you would earn a total of  5,500  from holding PJ Metal Co or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Shinhan Inverse Copper  vs.  PJ Metal Co

Shinhan Inverse Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinhan Inverse Copper has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PJ Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJ Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PJ Metal 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 PJ Metal

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

The idea behind Shinhan Inverse Copper and PJ Metal Co 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.