Correlation Between Haitai Confectionery and Shinhan Inverse

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

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

Diversification Opportunities for Haitai Confectionery and Shinhan Inverse

-0.31

Correlation Coefficient

Haitai Confectionery  Shinhan Inverse

Very good diversification

The 3 months correlation between Haitai and Shinhan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Shinhan Inverse Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Copper and Haitai Confectionery 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 Haitai Confectionery Foods 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 Copper has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and Shinhan Inverse go up and down completely randomly.

Pair Corralation between Haitai Confectionery and Shinhan Inverse

Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to under-perform the Shinhan Inverse. In addition to that, Haitai Confectionery is 1.39 times more volatile than Shinhan Inverse Copper. It trades about -0.01 of its total potential returns per unit of risk. Shinhan Inverse Copper is currently generating about 0.01 per unit of volatility. If you would invest  561,500  in Shinhan Inverse Copper on September 3, 2024 and sell it today you would earn a total of  3,500  from holding Shinhan Inverse Copper or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Haitai Confectionery Foods  vs.  Shinhan Inverse Copper

Haitai Confectionery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haitai Confectionery Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Haitai Confectionery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shinhan Inverse Copper

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Copper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Haitai Confectionery and Shinhan Inverse

The main advantage of trading using opposite Haitai Confectionery and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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 Haitai Confectionery Foods and Shinhan Inverse Copper 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.