Correlation Between Shinhan Financial and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Korean Reinsurance 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 Korean Reinsurance 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 Korean Reinsurance Co, you can compare the effects of market volatilities on Shinhan Financial and Korean Reinsurance 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 Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Korean Reinsurance.
Diversification Opportunities for Shinhan Financial and Korean Reinsurance
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and Korean is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance 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 Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Shinhan Financial and Korean Reinsurance
Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Korean Reinsurance. In addition to that, Shinhan Financial is 1.55 times more volatile than Korean Reinsurance Co. It trades about -0.15 of its total potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.06 per unit of volatility. If you would invest 789,000 in Korean Reinsurance Co on September 13, 2024 and sell it today you would earn a total of 17,000 from holding Korean Reinsurance Co or generate 2.15% 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. Korean Reinsurance Co
Performance |
| Timeline |
| Shinhan Financial |
| Korean Reinsurance |
Shinhan Financial and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Korean Reinsurance
The main advantage of trading using opposite Shinhan Financial and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. Samsung Electronics Co | Shinhan Financial vs. SK Hynix | Shinhan Financial vs. POSCO Holdings |
| Korean Reinsurance vs. Dgb Financial | Korean Reinsurance vs. Jeju Bank | Korean Reinsurance vs. Shinhan Financial Group | Korean Reinsurance vs. DB Financial Investment |
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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