Correlation Between SK Hynix and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both SK Hynix and Shinhan Financial 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 SK Hynix and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Hynix and Shinhan Financial Group, you can compare the effects of market volatilities on SK Hynix and Shinhan Financial 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 SK Hynix with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Hynix and Shinhan Financial.
Diversification Opportunities for SK Hynix and Shinhan Financial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 000660 and Shinhan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SK Hynix and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and SK Hynix 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 SK Hynix are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of SK Hynix i.e., SK Hynix and Shinhan Financial go up and down completely randomly.
Pair Corralation between SK Hynix and Shinhan Financial
Assuming the 90 days trading horizon SK Hynix is expected to under-perform the Shinhan Financial. In addition to that, SK Hynix is 1.12 times more volatile than Shinhan Financial Group. It trades about -0.14 of its total potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.04 per unit of volatility. If you would invest 5,600,000 in Shinhan Financial Group on August 29, 2024 and sell it today you would lose (170,000) from holding Shinhan Financial Group or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Hynix vs. Shinhan Financial Group
Performance |
| Timeline |
| SK Hynix |
| Shinhan Financial |
SK Hynix and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Hynix and Shinhan Financial
The main advantage of trading using opposite SK Hynix and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Hynix position performs unexpectedly, Shinhan Financial 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 Financial will offset losses from the drop in Shinhan Financial's long position.| SK Hynix vs. Finebesteel | SK Hynix vs. Gyeongnam Steel Co | SK Hynix vs. Jeil Steel Mfg | SK Hynix vs. Echomarketing CoLtd |
| Shinhan Financial vs. Cube Entertainment | Shinhan Financial vs. Dreamus Company | Shinhan Financial vs. LG Energy Solution | Shinhan Financial vs. Dongwon System |
Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |