Correlation Between Shinhan Financial and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Woori Financial 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 Woori Financial 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 Woori Financial Group, you can compare the effects of market volatilities on Shinhan Financial and Woori Financial 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 Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Woori Financial.
Diversification Opportunities for Shinhan Financial and Woori Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Woori is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Woori Financial go up and down completely randomly.
Pair Corralation between Shinhan Financial and Woori Financial
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.27 times more return on investment than Woori Financial. However, Shinhan Financial is 1.27 times more volatile than Woori Financial Group. It trades about 0.06 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.07 per unit of risk. If you would invest 3,368,979 in Shinhan Financial Group on August 24, 2024 and sell it today you would earn a total of 2,181,021 from holding Shinhan Financial Group or generate 64.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Woori Financial Group
Performance |
| Timeline |
| Shinhan Financial |
| Woori Financial Group |
Shinhan Financial and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Woori Financial
The main advantage of trading using opposite Shinhan Financial and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial's long position.| Shinhan Financial vs. PJ Metal Co | Shinhan Financial vs. Youngsin Metal Industrial | Shinhan Financial vs. Dongil Metal Co | Shinhan Financial vs. Sewoon Medical Co |
| Woori Financial vs. Shinhan Financial Group | Woori Financial vs. Hana Financial | Woori Financial vs. KakaoBank Corp | Woori Financial vs. Industrial Bank |
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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