Correlation Between Shinhan Financial and SK Holdings
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and SK Holdings 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 SK Holdings 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 SK Holdings Co, you can compare the effects of market volatilities on Shinhan Financial and SK Holdings 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 SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and SK Holdings.
Diversification Opportunities for Shinhan Financial and SK Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and 034730 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and SK Holdings go up and down completely randomly.
Pair Corralation between Shinhan Financial and SK Holdings
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 4.7 times less return on investment than SK Holdings. But when comparing it to its historical volatility, Shinhan Financial Group is 1.64 times less risky than SK Holdings. It trades about 0.03 of its potential returns per unit of risk. SK Holdings Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 14,080,000 in SK Holdings Co on October 14, 2024 and sell it today you would earn a total of 520,000 from holding SK Holdings Co or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. SK Holdings Co
Performance |
| Timeline |
| Shinhan Financial |
| SK Holdings |
Shinhan Financial and SK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and SK Holdings
The main advantage of trading using opposite Shinhan Financial and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, SK Holdings 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 SK Holdings will offset losses from the drop in SK Holdings' long position.| Shinhan Financial vs. Incar Financial Service | Shinhan Financial vs. TS Investment Corp | Shinhan Financial vs. Hana Financial | Shinhan Financial vs. ABOV Semiconductor Co |
| SK Holdings vs. Dongbang Transport Logistics | SK Holdings vs. Camus Engineering Construction | SK Holdings vs. Dongwoo Farm To | SK Holdings vs. Nam Hwa Construction |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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