Correlation Between Samsung Electronics and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Shinhan Financial Group, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Shinhan Financial.
Diversification Opportunities for Samsung Electronics and Shinhan Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samsung and Shinhan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics i.e., Samsung Electronics and Shinhan Financial go up and down completely randomly.
Pair Corralation between Samsung Electronics and Shinhan Financial
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Shinhan Financial. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.16 times less risky than Shinhan Financial. The stock trades about -0.14 of its potential returns per unit of risk. The Shinhan Financial Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Shinhan Financial Group
Performance |
| Timeline |
| Samsung Electronics |
| Shinhan Financial |
Samsung Electronics and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Shinhan Financial
The main advantage of trading using opposite Samsung Electronics and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. Korea Air Svc | Samsung Electronics vs. Display Tech Co | Samsung Electronics vs. PLAYWITH | Samsung Electronics vs. Chorokbaem Healthcare Co |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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