Correlation Between Shinhan Financial and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Lotte Chilsung 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 Lotte Chilsung 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 Lotte Chilsung Beverage, you can compare the effects of market volatilities on Shinhan Financial and Lotte Chilsung 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 Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Lotte Chilsung.
Diversification Opportunities for Shinhan Financial and Lotte Chilsung
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Lotte is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage 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 Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Shinhan Financial and Lotte Chilsung
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.9 times more return on investment than Lotte Chilsung. However, Shinhan Financial Group is 1.11 times less risky than Lotte Chilsung. It trades about -0.03 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about -0.27 per unit of risk. If you would invest 5,040,000 in Shinhan Financial Group on October 12, 2024 and sell it today you would lose (55,000) from holding Shinhan Financial Group or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Shinhan Financial |
| Lotte Chilsung Beverage |
Shinhan Financial and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Lotte Chilsung
The main advantage of trading using opposite Shinhan Financial and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Lotte Chilsung 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 Lotte Chilsung will offset losses from the drop in Lotte Chilsung's long position.| Shinhan Financial vs. Hwangkum Steel Technology | Shinhan Financial vs. Eagle Veterinary Technology | Shinhan Financial vs. Iljin Display | Shinhan Financial vs. INFINITT Healthcare Co |
| Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. KB Financial Group | Lotte Chilsung 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 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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