Correlation Between Shinhan Financial and Naver
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on Shinhan Financial and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Naver.
Diversification Opportunities for Shinhan Financial and Naver
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Naver is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Naver go up and down completely randomly.
Pair Corralation between Shinhan Financial and Naver
Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Naver. In addition to that, Shinhan Financial is 1.14 times more volatile than Naver. It trades about -0.09 of its total potential returns per unit of risk. Naver is currently generating about 0.14 per unit of volatility. If you would invest 17,140,000 in Naver on October 14, 2024 and sell it today you would earn a total of 3,060,000 from holding Naver or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Naver
Performance |
| Timeline |
| Shinhan Financial |
| Naver |
Shinhan Financial and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Naver
The main advantage of trading using opposite Shinhan Financial and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's 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 |
| Naver vs. iNtRON Biotechnology | Naver vs. Keyang Electric Machinery | Naver vs. Lotte Non Life Insurance | Naver vs. Hanwha Life Insurance |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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