Correlation Between Shinhan Financial and Cuckoo Electronics
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Cuckoo Electronics 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 Cuckoo Electronics 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 Cuckoo Electronics Co, you can compare the effects of market volatilities on Shinhan Financial and Cuckoo Electronics 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 Cuckoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Cuckoo Electronics.
Diversification Opportunities for Shinhan Financial and Cuckoo Electronics
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Cuckoo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics 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 Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Cuckoo Electronics go up and down completely randomly.
Pair Corralation between Shinhan Financial and Cuckoo Electronics
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.86 times more return on investment than Cuckoo Electronics. However, Shinhan Financial Group is 1.17 times less risky than Cuckoo Electronics. It trades about 0.19 of its potential returns per unit of risk. Cuckoo Electronics Co is currently generating about -0.11 per unit of risk. If you would invest 4,835,000 in Shinhan Financial Group on October 28, 2024 and sell it today you would earn a total of 165,000 from holding Shinhan Financial Group or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Cuckoo Electronics Co
Performance |
| Timeline |
| Shinhan Financial |
| Cuckoo Electronics |
Shinhan Financial and Cuckoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Cuckoo Electronics
The main advantage of trading using opposite Shinhan Financial and Cuckoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Cuckoo Electronics 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 Cuckoo Electronics will offset losses from the drop in Cuckoo Electronics' long position.| Shinhan Financial vs. Dong A Steel Technology | Shinhan Financial vs. Moonbae Steel | Shinhan Financial vs. Bookook Steel | Shinhan Financial vs. SeAH Besteel Corp |
| Cuckoo Electronics vs. Daejung Chemicals Metals | Cuckoo Electronics vs. Hanjin Transportation Co | Cuckoo Electronics vs. Kbi Metal Co | Cuckoo Electronics vs. Taegu Broadcasting |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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