Correlation Between Shinhan Financial and National Plastic
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and National Plastic 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 National Plastic 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 National Plastic Co, you can compare the effects of market volatilities on Shinhan Financial and National Plastic 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 National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and National Plastic.
Diversification Opportunities for Shinhan Financial and National Plastic
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shinhan and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic 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 National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and National Plastic go up and down completely randomly.
Pair Corralation between Shinhan Financial and National Plastic
Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the National Plastic. In addition to that, Shinhan Financial is 1.23 times more volatile than National Plastic Co. It trades about -0.28 of its total potential returns per unit of risk. National Plastic Co is currently generating about -0.02 per unit of volatility. If you would invest 241,500 in National Plastic Co on November 29, 2024 and sell it today you would lose (1,000.00) from holding National Plastic Co or give up 0.41% 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. National Plastic Co
Performance |
| Timeline |
| Shinhan Financial |
| National Plastic |
Shinhan Financial and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and National Plastic
The main advantage of trading using opposite Shinhan Financial and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Shinhan Financial vs. Display Tech Co | Shinhan Financial vs. SCI Information Service | Shinhan Financial vs. DataSolution | Shinhan Financial vs. Lotte Data Communication |
| National Plastic vs. InfoBank | National Plastic vs. DB Financial Investment | National Plastic vs. Lotte Non Life Insurance | National Plastic vs. LG Household Healthcare |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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