Correlation Between Shinhan Financial and Automobile
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Shinhan Financial and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Automobile.
Diversification Opportunities for Shinhan Financial and Automobile
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Automobile is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Automobile go up and down completely randomly.
Pair Corralation between Shinhan Financial and Automobile
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.4 times more return on investment than Automobile. However, Shinhan Financial Group is 2.52 times less risky than Automobile. It trades about 0.28 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.21 per unit of risk. If you would invest 4,895,000 in Shinhan Financial Group on November 5, 2024 and sell it today you would earn a total of 215,000 from holding Shinhan Financial Group or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Automobile Pc
Performance |
| Timeline |
| Shinhan Financial |
| Automobile Pc |
Shinhan Financial and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Automobile
The main advantage of trading using opposite Shinhan Financial and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Shinhan Financial vs. ABCO Electronics Co | Shinhan Financial vs. Jahwa Electronics Co | Shinhan Financial vs. Cuckoo Electronics Co | Shinhan Financial vs. Kukdong Oil Chemicals |
| Automobile vs. Kyung In Synthetic Corp | Automobile vs. Youngchang Chemical Co | Automobile vs. DONGKUK TED METAL | Automobile vs. Tae Kyung Chemical |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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