Correlation Between Shinhan WTI and HMM

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

Diversification Opportunities for Shinhan WTI and HMM

0.0

Correlation Coefficient

Shinhan WTI  HMM

Pay attention - limited upside

The 3 months correlation between Shinhan and HMM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM 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 HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and HMM go up and down completely randomly.

Pair Corralation between Shinhan WTI and HMM

If you would invest (100.00) in Shinhan WTI Futures on October 1, 2024 and sell it today you would earn a total of  100.00  from holding Shinhan WTI Futures or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shinhan WTI Futures  vs.  HMM Co

Shinhan WTI Futures

Risk-Adjusted Performance

0 of 100

Weak

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

HMM Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Shinhan WTI Futures and HMM 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.