Correlation Between Shinhan Financial and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on Shinhan Financial and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Industrial Bank.
Diversification Opportunities for Shinhan Financial and Industrial Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shinhan and Industrial is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Industrial Bank go up and down completely randomly.
Pair Corralation between Shinhan Financial and Industrial Bank
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.69 times more return on investment than Industrial Bank. However, Shinhan Financial is 1.69 times more volatile than Industrial Bank. It trades about 0.05 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.07 per unit of risk. If you would invest 4,097,506 in Shinhan Financial Group on November 3, 2024 and sell it today you would earn a total of 1,012,494 from holding Shinhan Financial Group or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Industrial Bank
Performance |
| Timeline |
| Shinhan Financial |
| Industrial Bank |
Shinhan Financial and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Industrial Bank
The main advantage of trading using opposite Shinhan Financial and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Shinhan Financial vs. UJU Electronics Co | Shinhan Financial vs. DAEDUCK ELECTRONICS CoLtd | Shinhan Financial vs. Daesung Industrial Co | Shinhan Financial vs. ABCO Electronics Co |
| Industrial Bank vs. Coloray International Investment | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. DSC Investment | Industrial Bank vs. Tway Air Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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