Correlation Between Shinhan Financial and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Shinhan Financial and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Woorim Machinery.
Diversification Opportunities for Shinhan Financial and Woorim Machinery
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and Woorim is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Woorim Machinery go up and down completely randomly.
Pair Corralation between Shinhan Financial and Woorim Machinery
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 13.1 times less return on investment than Woorim Machinery. But when comparing it to its historical volatility, Shinhan Financial Group is 3.5 times less risky than Woorim Machinery. It trades about 0.07 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 476,000 in Woorim Machinery Co on October 25, 2024 and sell it today you would earn a total of 82,000 from holding Woorim Machinery Co or generate 17.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Woorim Machinery Co
Performance |
| Timeline |
| Shinhan Financial |
| Woorim Machinery |
Shinhan Financial and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Woorim Machinery
The main advantage of trading using opposite Shinhan Financial and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery'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 |
| Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. KB Financial Group | Woorim Machinery 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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