Correlation Between Shinhan Financial and Shinsegae Engineering
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Shinsegae Engineering 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 Shinsegae Engineering 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 Shinsegae Engineering Construction, you can compare the effects of market volatilities on Shinhan Financial and Shinsegae Engineering 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 Shinsegae Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Shinsegae Engineering.
Diversification Opportunities for Shinhan Financial and Shinsegae Engineering
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinhan and Shinsegae is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering 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 Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Shinsegae Engineering go up and down completely randomly.
Pair Corralation between Shinhan Financial and Shinsegae Engineering
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 14.96 times more return on investment than Shinsegae Engineering. However, Shinhan Financial is 14.96 times more volatile than Shinsegae Engineering Construction. It trades about 0.31 of its potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about 0.27 per unit of risk. If you would invest 4,775,000 in Shinhan Financial Group on November 1, 2024 and sell it today you would earn a total of 225,000 from holding Shinhan Financial Group or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Shinsegae Engineering Construc
Performance |
| Timeline |
| Shinhan Financial |
| Shinsegae Engineering |
Shinhan Financial and Shinsegae Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Shinsegae Engineering
The main advantage of trading using opposite Shinhan Financial and Shinsegae Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Shinsegae Engineering 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 Shinsegae Engineering will offset losses from the drop in Shinsegae Engineering's long position.| Shinhan Financial vs. Duksan Hi Metal | Shinhan Financial vs. Dongil Metal Co | Shinhan Financial vs. DONGKUK TED METAL | Shinhan Financial vs. Youngsin Metal Industrial |
| Shinsegae Engineering vs. KB Financial Group | Shinsegae Engineering vs. Shinhan Financial Group | Shinsegae Engineering vs. Hana Financial | Shinsegae Engineering 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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