Correlation Between Shinhan Financial and Innowireless
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on Shinhan Financial and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Innowireless.
Diversification Opportunities for Shinhan Financial and Innowireless
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shinhan and Innowireless is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Innowireless go up and down completely randomly.
Pair Corralation between Shinhan Financial and Innowireless
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 1.74 times less return on investment than Innowireless. But when comparing it to its historical volatility, Shinhan Financial Group is 2.1 times less risky than Innowireless. It trades about 0.28 of its potential returns per unit of risk. Innowireless Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,120,000 in Innowireless Co on November 5, 2024 and sell it today you would earn a total of 160,000 from holding Innowireless Co or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Innowireless Co
Performance |
| Timeline |
| Shinhan Financial |
| Innowireless |
Shinhan Financial and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Innowireless
The main advantage of trading using opposite Shinhan Financial and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| Shinhan Financial vs. Playgram Co | Shinhan Financial vs. Korean Reinsurance Co | Shinhan Financial vs. Dongbu Insurance Co | Shinhan Financial vs. Samsung Publishing Co |
| Innowireless vs. Daelim Trading Co | Innowireless vs. LG Chemicals | Innowireless vs. SK Chemicals Co | Innowireless vs. Golden Bridge Investment |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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