Correlation Between Jeju Bank and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Jeju Bank 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 Jeju Bank and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and Shinhan Financial Group, you can compare the effects of market volatilities on Jeju Bank 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 Jeju Bank with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Shinhan Financial.
Diversification Opportunities for Jeju Bank and Shinhan Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jeju and Shinhan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Jeju Bank 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 Jeju Bank 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 Jeju Bank i.e., Jeju Bank and Shinhan Financial go up and down completely randomly.
Pair Corralation between Jeju Bank and Shinhan Financial
Assuming the 90 days trading horizon Jeju Bank is expected to generate 1.85 times more return on investment than Shinhan Financial. However, Jeju Bank is 1.85 times more volatile than Shinhan Financial Group. It trades about 0.04 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.01 per unit of risk. If you would invest 809,000 in Jeju Bank on October 17, 2024 and sell it today you would earn a total of 10,000 from holding Jeju Bank or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. Shinhan Financial Group
Performance |
| Timeline |
| Jeju Bank |
| Shinhan Financial |
Jeju Bank and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and Shinhan Financial
The main advantage of trading using opposite Jeju Bank and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank 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.| Jeju Bank vs. System and Application | Jeju Bank vs. Daishin Information Communications | Jeju Bank vs. Korea Information Engineering | Jeju Bank vs. Nice Information Telecommunication |
| Shinhan Financial vs. Air Busan Co | Shinhan Financial vs. Jeju Air Co | Shinhan Financial vs. Dgb Financial | Shinhan Financial vs. Shinhan Inverse Silver |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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