Correlation Between Shinhan Financial and Samsung Card
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Samsung Card 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 Samsung Card 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 Samsung Card Co, you can compare the effects of market volatilities on Shinhan Financial and Samsung Card 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 Samsung Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Samsung Card.
Diversification Opportunities for Shinhan Financial and Samsung Card
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Samsung is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Samsung Card Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Card 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 Samsung Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Card has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Samsung Card go up and down completely randomly.
Pair Corralation between Shinhan Financial and Samsung Card
Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Samsung Card. In addition to that, Shinhan Financial is 1.58 times more volatile than Samsung Card Co. It trades about -0.18 of its total potential returns per unit of risk. Samsung Card Co is currently generating about -0.03 per unit of volatility. If you would invest 4,045,000 in Samsung Card Co on September 12, 2024 and sell it today you would lose (55,000) from holding Samsung Card Co or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Samsung Card Co
Performance |
| Timeline |
| Shinhan Financial |
| Samsung Card |
Shinhan Financial and Samsung Card Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Samsung Card
The main advantage of trading using opposite Shinhan Financial and Samsung Card positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Samsung Card 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 Samsung Card will offset losses from the drop in Samsung Card's long position.| Shinhan Financial vs. KB Financial Group | Shinhan Financial vs. Hana Financial | Shinhan Financial vs. Woori Financial Group | Shinhan Financial vs. Samsung Electronics Co |
| Samsung Card vs. KB Financial Group | Samsung Card vs. Shinhan Financial Group | Samsung Card vs. Hana Financial | Samsung Card 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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