Correlation Between Shinhan WTI and Clean Science

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

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

Diversification Opportunities for Shinhan WTI and Clean Science

0.29

Correlation Coefficient

Shinhan WTI  Clean Science

Modest diversification

The 3 months correlation between Shinhan and Clean is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co and Shinhan WTI 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 WTI Futures are associated (or correlated) with Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and Clean Science go up and down completely randomly.

Pair Corralation between Shinhan WTI and Clean Science

Assuming the 90 days trading horizon Shinhan WTI is expected to generate 3.04 times less return on investment than Clean Science. But when comparing it to its historical volatility, Shinhan WTI Futures is 2.24 times less risky than Clean Science. It trades about 0.29 of its potential returns per unit of risk. Clean Science co is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  422,000  in Clean Science co on October 13, 2024 and sell it today you would earn a total of  90,000  from holding Clean Science co or generate 21.33% return on investment over 90 days.

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

Shinhan WTI Futures  vs.  Clean Science co

Shinhan WTI Futures

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan WTI Futures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinhan WTI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clean Science co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Science co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Clean Science 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 WTI and Clean Science

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

The idea behind Shinhan WTI Futures and Clean Science 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..