Correlation Between Shinhan Financial and People Technology
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and People Technology 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 People Technology 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 People Technology, you can compare the effects of market volatilities on Shinhan Financial and People Technology 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 People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and People Technology.
Diversification Opportunities for Shinhan Financial and People Technology
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and People is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology 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 People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and People Technology go up and down completely randomly.
Pair Corralation between Shinhan Financial and People Technology
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.52 times more return on investment than People Technology. However, Shinhan Financial Group is 1.94 times less risky than People Technology. It trades about -0.03 of its potential returns per unit of risk. People Technology is currently generating about -0.18 per unit of risk. If you would invest 5,400,000 in Shinhan Financial Group on September 2, 2024 and sell it today you would lose (100,000) from holding Shinhan Financial Group or give up 1.85% 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. People Technology
Performance |
| Timeline |
| Shinhan Financial |
| People Technology |
Shinhan Financial and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and People Technology
The main advantage of trading using opposite Shinhan Financial and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, People Technology 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 People Technology will offset losses from the drop in People Technology's long position.| Shinhan Financial vs. Korea Shipbuilding Offshore | Shinhan Financial vs. Ilji Technology Co | Shinhan Financial vs. NewFlex Technology Co | Shinhan Financial vs. Eagle Veterinary Technology |
| People Technology vs. Korea New Network | People Technology vs. ICD Co | People Technology vs. DYPNF CoLtd | People Technology vs. Busan Industrial Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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