Correlation Between Shinhan Financial and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and PJ Metal 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 PJ Metal 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 PJ Metal Co, you can compare the effects of market volatilities on Shinhan Financial and PJ Metal 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 PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and PJ Metal.
Diversification Opportunities for Shinhan Financial and PJ Metal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and 128660 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal 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 PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and PJ Metal go up and down completely randomly.
Pair Corralation between Shinhan Financial and PJ Metal
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.55 times more return on investment than PJ Metal. However, Shinhan Financial is 1.55 times more volatile than PJ Metal Co. It trades about -0.04 of its potential returns per unit of risk. PJ Metal Co is currently generating about -0.16 per unit of risk. If you would invest 5,600,000 in Shinhan Financial Group on August 28, 2024 and sell it today you would lose (170,000) from holding Shinhan Financial Group or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. PJ Metal Co
Performance |
| Timeline |
| Shinhan Financial |
| PJ Metal |
Shinhan Financial and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and PJ Metal
The main advantage of trading using opposite Shinhan Financial and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, PJ Metal 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 PJ Metal will offset losses from the drop in PJ Metal's long position.| Shinhan Financial vs. Sunny Electronics Corp | Shinhan Financial vs. Miwon Chemicals Co | Shinhan Financial vs. Samyoung Electronics Co | Shinhan Financial vs. Digital Multimedia Technology |
| PJ Metal vs. Keum Kang Steel | PJ Metal vs. Tplex Co | PJ Metal vs. Samhyun Steel Co | PJ Metal vs. Wonil Special Steel |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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