Correlation Between Shinhan Financial and NH Investment
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and NH 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 NH 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 NH Investment Securities, you can compare the effects of market volatilities on Shinhan Financial and NH 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 NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and NH Investment.
Diversification Opportunities for Shinhan Financial and NH Investment
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and 005940 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities 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 NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and NH Investment go up and down completely randomly.
Pair Corralation between Shinhan Financial and NH Investment
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.49 times more return on investment than NH Investment. However, Shinhan Financial is 1.49 times more volatile than NH Investment Securities. It trades about 0.07 of its potential returns per unit of risk. NH Investment Securities is currently generating about 0.1 per unit of risk. If you would invest 3,467,011 in Shinhan Financial Group on October 28, 2024 and sell it today you would earn a total of 1,532,989 from holding Shinhan Financial Group or generate 44.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. NH Investment Securities
Performance |
| Timeline |
| Shinhan Financial |
| NH Investment Securities |
Shinhan Financial and NH Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and NH Investment
The main advantage of trading using opposite Shinhan Financial and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, NH 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 NH Investment will offset losses from the drop in NH Investment's long position.| Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. SK Hynix | Shinhan Financial vs. HMM Co |
| NH Investment vs. KB Financial Group | NH Investment vs. Shinhan Financial Group | NH Investment vs. Hana Financial | NH Investment vs. Woori 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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