Correlation Between Hanjin Transportation and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation 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 Hanjin Transportation and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjin Transportation Co and Shinhan Financial Group, you can compare the effects of market volatilities on Hanjin Transportation 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 Hanjin Transportation with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Shinhan Financial.
Diversification Opportunities for Hanjin Transportation and Shinhan Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanjin and Shinhan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Hanjin Transportation 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 Hanjin Transportation Co 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 Hanjin Transportation i.e., Hanjin Transportation and Shinhan Financial go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Shinhan Financial
Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 2.38 times less return on investment than Shinhan Financial. But when comparing it to its historical volatility, Hanjin Transportation Co is 1.69 times less risky than Shinhan Financial. It trades about 0.22 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,765,000 in Shinhan Financial Group on October 29, 2024 and sell it today you would earn a total of 235,000 from holding Shinhan Financial Group or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Shinhan Financial Group
Performance |
| Timeline |
| Hanjin Transportation |
| Shinhan Financial |
Hanjin Transportation and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Shinhan Financial
The main advantage of trading using opposite Hanjin Transportation and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation 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.| Hanjin Transportation vs. Koryo Credit Information | Hanjin Transportation vs. SV Investment | Hanjin Transportation vs. Leaders Technology Investment | Hanjin Transportation vs. Insung Information Co |
| Shinhan Financial vs. Hanil Chemical Ind | Shinhan Financial vs. Hanwha Chemical Corp | Shinhan Financial vs. BIT Computer Co | Shinhan Financial vs. CG Hi Tech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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