Correlation Between Shinhan Inverse and Finebesteel

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

Diversification Opportunities for Shinhan Inverse and Finebesteel

0.54

Correlation Coefficient

Shinhan Inverse  Finebesteel

Very weak diversification

The 3 months correlation between Shinhan and Finebesteel is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Copper and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and Finebesteel go up and down completely randomly.

Pair Corralation between Shinhan Inverse and Finebesteel

Assuming the 90 days trading horizon Shinhan Inverse Copper is expected to generate 0.59 times more return on investment than Finebesteel. However, Shinhan Inverse Copper is 1.69 times less risky than Finebesteel. It trades about 0.08 of its potential returns per unit of risk. Finebesteel is currently generating about -0.15 per unit of risk. If you would invest  551,500  in Shinhan Inverse Copper on October 10, 2024 and sell it today you would earn a total of  8,000  from holding Shinhan Inverse Copper or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Shinhan Inverse Copper  vs.  Finebesteel

Shinhan Inverse Copper

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Copper are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinhan Inverse may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Finebesteel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shinhan Inverse and Finebesteel

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

The idea behind Shinhan Inverse Copper and Finebesteel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.