Correlation Between Shinhan Financial and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Daou Technology 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 Daou Technology 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 Daou Technology, you can compare the effects of market volatilities on Shinhan Financial and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Daou Technology.
Diversification Opportunities for Shinhan Financial and Daou Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Daou is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Daou Technology go up and down completely randomly.
Pair Corralation between Shinhan Financial and Daou Technology
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.88 times more return on investment than Daou Technology. However, Shinhan Financial Group is 1.14 times less risky than Daou Technology. It trades about 0.31 of its potential returns per unit of risk. Daou Technology is currently generating about 0.01 per unit of risk. If you would invest 4,765,000 in Shinhan Financial Group on October 29, 2024 and sell it today you would earn a total of 235,000 from holding Shinhan Financial Group or generate 4.93% 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. Daou Technology
Performance |
| Timeline |
| Shinhan Financial |
| Daou Technology |
Shinhan Financial and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Daou Technology
The main advantage of trading using opposite Shinhan Financial and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Shinhan Financial vs. Dong A Steel Technology | Shinhan Financial vs. Moonbae Steel | Shinhan Financial vs. Bookook Steel | Shinhan Financial vs. SeAH Besteel Corp |
| Daou Technology vs. Lee Ku Industrial | Daou Technology vs. Lake Materials Co | Daou Technology vs. Ssangyong Materials Corp | Daou Technology vs. LS Materials |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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