Correlation Between Shinhan Financial and Sebo Manufacturing
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Sebo Manufacturing 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 Sebo Manufacturing 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 Sebo Manufacturing Engineering, you can compare the effects of market volatilities on Shinhan Financial and Sebo Manufacturing 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 Sebo Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Sebo Manufacturing.
Diversification Opportunities for Shinhan Financial and Sebo Manufacturing
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and Sebo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Sebo Manufacturing Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebo Manufacturing 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 Sebo Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebo Manufacturing has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Sebo Manufacturing go up and down completely randomly.
Pair Corralation between Shinhan Financial and Sebo Manufacturing
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.65 times more return on investment than Sebo Manufacturing. However, Shinhan Financial Group is 1.55 times less risky than Sebo Manufacturing. It trades about 0.09 of its potential returns per unit of risk. Sebo Manufacturing Engineering is currently generating about 0.01 per unit of risk. If you would invest 4,915,000 in Shinhan Financial Group on November 9, 2024 and sell it today you would earn a total of 85,000 from holding Shinhan Financial Group or generate 1.73% 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. Sebo Manufacturing Engineering
Performance |
| Timeline |
| Shinhan Financial |
| Sebo Manufacturing |
Shinhan Financial and Sebo Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Sebo Manufacturing
The main advantage of trading using opposite Shinhan Financial and Sebo Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Sebo Manufacturing 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 Sebo Manufacturing will offset losses from the drop in Sebo Manufacturing's long position.| Shinhan Financial vs. BIT Computer Co | Shinhan Financial vs. Nable Communications | Shinhan Financial vs. SK Telecom Co | Shinhan Financial vs. Inzi Display CoLtd |
| Sebo Manufacturing vs. Jeong Moon Information | Sebo Manufacturing vs. Histeel | Sebo Manufacturing vs. Lotte Chilsung Beverage | Sebo Manufacturing vs. SCI Information Service |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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