Correlation Between Shinhan Financial and Kiwoom
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Kiwoom 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 Kiwoom 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 Kiwoom, you can compare the effects of market volatilities on Shinhan Financial and Kiwoom 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 Kiwoom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Kiwoom.
Diversification Opportunities for Shinhan Financial and Kiwoom
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Kiwoom is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Kiwoom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiwoom 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 Kiwoom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiwoom has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Kiwoom go up and down completely randomly.
Pair Corralation between Shinhan Financial and Kiwoom
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.02 times more return on investment than Kiwoom. However, Shinhan Financial is 1.02 times more volatile than Kiwoom. It trades about 0.04 of its potential returns per unit of risk. Kiwoom is currently generating about 0.01 per unit of risk. If you would invest 4,524,371 in Shinhan Financial Group on September 15, 2024 and sell it today you would earn a total of 425,629 from holding Shinhan Financial Group or generate 9.41% 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. Kiwoom
Performance |
| Timeline |
| Shinhan Financial |
| Kiwoom |
Shinhan Financial and Kiwoom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Kiwoom
The main advantage of trading using opposite Shinhan Financial and Kiwoom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Kiwoom 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 Kiwoom will offset losses from the drop in Kiwoom'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 |
| Kiwoom vs. KB Financial Group | Kiwoom vs. Shinhan Financial Group | Kiwoom vs. Hana Financial | Kiwoom 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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