Correlation Between Shinhan Financial and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Shinhan Financial and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Sungchang Autotech.
Diversification Opportunities for Shinhan Financial and Sungchang Autotech
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Sungchang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Shinhan Financial and Sungchang Autotech
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 2.04 times less return on investment than Sungchang Autotech. But when comparing it to its historical volatility, Shinhan Financial Group is 1.15 times less risky than Sungchang Autotech. It trades about 0.07 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 350,049 in Sungchang Autotech Co on October 25, 2024 and sell it today you would earn a total of 8,951 from holding Sungchang Autotech Co or generate 2.56% 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. Sungchang Autotech Co
Performance |
| Timeline |
| Shinhan Financial |
| Sungchang Autotech |
Shinhan Financial and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Sungchang Autotech
The main advantage of trading using opposite Shinhan Financial and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Shinhan Financial vs. Woori Technology Investment | Shinhan Financial vs. UJU Electronics Co | Shinhan Financial vs. KTB Investment Securities | Shinhan Financial vs. DAEDUCK ELECTRONICS CoLtd |
| Sungchang Autotech vs. Samsung Electronics Co | Sungchang Autotech vs. Samsung Electronics Co | Sungchang Autotech vs. KB Financial Group | Sungchang Autotech vs. Shinhan 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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