Correlation Between Shinhan Financial and Sangsangin Investment
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Sangsangin Investment 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 Shinhan Financial and Sangsangin Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and Sangsangin Investment Securities, you can compare the effects of market volatilities on Shinhan Financial and Sangsangin Investment 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 Shinhan Financial with a short position of Sangsangin Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Sangsangin Investment.
Diversification Opportunities for Shinhan Financial and Sangsangin Investment
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Sangsangin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Sangsangin Investment Securiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsangin Investment and Shinhan Financial 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 Shinhan Financial Group are associated (or correlated) with Sangsangin Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsangin Investment has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Sangsangin Investment go up and down completely randomly.
Pair Corralation between Shinhan Financial and Sangsangin Investment
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.58 times more return on investment than Sangsangin Investment. However, Shinhan Financial is 1.58 times more volatile than Sangsangin Investment Securities. It trades about 0.07 of its potential returns per unit of risk. Sangsangin Investment Securities is currently generating about -0.21 per unit of risk. If you would invest 4,446,027 in Shinhan Financial Group on September 2, 2024 and sell it today you would earn a total of 853,973 from holding Shinhan Financial Group or generate 19.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Sangsangin Investment Securiti
Performance |
| Timeline |
| Shinhan Financial |
| Sangsangin Investment |
Shinhan Financial and Sangsangin Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Sangsangin Investment
The main advantage of trading using opposite Shinhan Financial and Sangsangin Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Sangsangin Investment 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 Sangsangin Investment will offset losses from the drop in Sangsangin Investment's long position.| Shinhan Financial vs. Korea Shipbuilding Offshore | Shinhan Financial vs. Ilji Technology Co | Shinhan Financial vs. NewFlex Technology Co | Shinhan Financial vs. Eagle Veterinary Technology |
| Sangsangin Investment vs. Samsung Electronics Co | Sangsangin Investment vs. Samsung Electronics Co | Sangsangin Investment vs. KB Financial Group | Sangsangin Investment vs. Shinhan Financial Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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