Correlation Between Shinhan Financial and KakaoBank Corp
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp, you can compare the effects of market volatilities on Shinhan Financial and KakaoBank Corp 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 KakaoBank Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and KakaoBank Corp.
Diversification Opportunities for Shinhan Financial and KakaoBank Corp
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinhan and KakaoBank is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and KakaoBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KakaoBank Corp 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 KakaoBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KakaoBank Corp has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and KakaoBank Corp go up and down completely randomly.
Pair Corralation between Shinhan Financial and KakaoBank Corp
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.96 times more return on investment than KakaoBank Corp. However, Shinhan Financial Group is 1.04 times less risky than KakaoBank Corp. It trades about 0.06 of its potential returns per unit of risk. KakaoBank Corp is currently generating about 0.0 per unit of risk. If you would invest 3,428,370 in Shinhan Financial Group on January 25, 2025 and sell it today you would earn a total of 1,546,630 from holding Shinhan Financial Group or generate 45.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. KakaoBank Corp
Performance |
| Timeline |
| Shinhan Financial |
| KakaoBank Corp |
Shinhan Financial and KakaoBank Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and KakaoBank Corp
The main advantage of trading using opposite Shinhan Financial and KakaoBank Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, KakaoBank Corp 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 KakaoBank Corp will offset losses from the drop in KakaoBank Corp's long position.| Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. Hyundai Motor Co | Shinhan Financial vs. Hyundai Motor Co |
| KakaoBank Corp vs. Sangsin Energy Display | KakaoBank Corp vs. Samwha Electronics Co | KakaoBank Corp vs. Sungho Electronics Corp | KakaoBank Corp vs. Lotte Data Communication |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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