Correlation Between Daou Data and Shinhan Inverse

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

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

Diversification Opportunities for Daou Data and Shinhan Inverse

-0.32

Correlation Coefficient

Daou Data  Shinhan Inverse

Very good diversification

The 3 months correlation between Daou and Shinhan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and Shinhan Inverse WTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse WTI and Daou Data 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 Daou Data Corp are associated (or correlated) with Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse WTI has no effect on the direction of Daou Data i.e., Daou Data and Shinhan Inverse go up and down completely randomly.

Pair Corralation between Daou Data and Shinhan Inverse

Assuming the 90 days trading horizon Daou Data is expected to generate 3.52 times less return on investment than Shinhan Inverse. But when comparing it to its historical volatility, Daou Data Corp is 1.33 times less risky than Shinhan Inverse. It trades about 0.02 of its potential returns per unit of risk. Shinhan Inverse WTI is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  264,500  in Shinhan Inverse WTI on August 30, 2024 and sell it today you would earn a total of  15,500  from holding Shinhan Inverse WTI or generate 5.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Daou Data Corp  vs.  Shinhan Inverse WTI

Daou Data Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daou Data Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daou Data is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shinhan Inverse WTI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse WTI are ranked lower than 4 (%) 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 December 2024.

Pair Trading with Daou Data and Shinhan Inverse

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

The idea behind Daou Data Corp and Shinhan Inverse WTI 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.