Correlation Between Shinhan Financial and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Samsung Life 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 Life 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 Life Insurance, you can compare the effects of market volatilities on Shinhan Financial and Samsung Life 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 Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Samsung Life.
Diversification Opportunities for Shinhan Financial and Samsung Life
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Samsung is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance 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 Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Samsung Life go up and down completely randomly.
Pair Corralation between Shinhan Financial and Samsung Life
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.35 times more return on investment than Samsung Life. However, Shinhan Financial Group is 2.84 times less risky than Samsung Life. It trades about 0.15 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about -0.06 per unit of risk. If you would invest 4,895,000 in Shinhan Financial Group on November 6, 2024 and sell it today you would earn a total of 125,000 from holding Shinhan Financial Group or generate 2.55% 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. Samsung Life Insurance
Performance |
| Timeline |
| Shinhan Financial |
| Samsung Life Insurance |
Shinhan Financial and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Samsung Life
The main advantage of trading using opposite Shinhan Financial and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Samsung Life 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 Life will offset losses from the drop in Samsung Life's long position.| Shinhan Financial vs. Hironic Co | Shinhan Financial vs. LB Investment | Shinhan Financial vs. Stic Investments | Shinhan Financial vs. Nh Investment And |
| Samsung Life vs. Seoam Machinery Industry | Samsung Life vs. Dongkuk Structures Construction | Samsung Life vs. GS Engineering Construction | Samsung Life vs. Sejong Telecom |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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