Correlation Between POSCO Holdings and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings 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 POSCO Holdings and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and Shinhan Financial Group, you can compare the effects of market volatilities on POSCO Holdings 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 POSCO Holdings with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and Shinhan Financial.
Diversification Opportunities for POSCO Holdings and Shinhan Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between POSCO and Shinhan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and POSCO Holdings 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 POSCO Holdings 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 POSCO Holdings i.e., POSCO Holdings and Shinhan Financial go up and down completely randomly.
Pair Corralation between POSCO Holdings and Shinhan Financial
Assuming the 90 days trading horizon POSCO Holdings is expected to under-perform the Shinhan Financial. In addition to that, POSCO Holdings is 1.07 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 -0.02 per unit of volatility. If you would invest 5,340,355 in Shinhan Financial Group on September 12, 2024 and sell it today you would lose (300,355) from holding Shinhan Financial Group or give up 5.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. Shinhan Financial Group
Performance |
| Timeline |
| POSCO Holdings |
| Shinhan Financial |
POSCO Holdings and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and Shinhan Financial
The main advantage of trading using opposite POSCO Holdings and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings 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.| POSCO Holdings vs. Histeel | POSCO Holdings vs. DB Financial Investment | POSCO Holdings vs. Sangsangin Investment Securities | POSCO Holdings vs. Hankuk Steel Wire |
| Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. SK Hynix | Shinhan Financial vs. POSCO Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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