Correlation Between Shinhan Financial and DB Insurance
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and DB Insurance 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 DB Insurance 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 DB Insurance Co, you can compare the effects of market volatilities on Shinhan Financial and DB Insurance 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 DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and DB Insurance.
Diversification Opportunities for Shinhan Financial and DB Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and 005830 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance 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 DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and DB Insurance go up and down completely randomly.
Pair Corralation between Shinhan Financial and DB Insurance
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 1.35 times less return on investment than DB Insurance. But when comparing it to its historical volatility, Shinhan Financial Group is 1.17 times less risky than DB Insurance. It trades about 0.06 of its potential returns per unit of risk. DB Insurance Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,389,482 in DB Insurance Co on August 29, 2024 and sell it today you would earn a total of 4,940,518 from holding DB Insurance Co or generate 91.67% 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. DB Insurance Co
Performance |
| Timeline |
| Shinhan Financial |
| DB Insurance |
Shinhan Financial and DB Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and DB Insurance
The main advantage of trading using opposite Shinhan Financial and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, DB Insurance 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 DB Insurance will offset losses from the drop in DB Insurance's long position.| Shinhan Financial vs. AptaBio Therapeutics | Shinhan Financial vs. Daewoo SBI SPAC | Shinhan Financial vs. Dream Security co | Shinhan Financial vs. Microfriend |
| DB Insurance vs. Cube Entertainment | DB Insurance vs. Dreamus Company | DB Insurance vs. LG Energy Solution | DB Insurance vs. Dongwon System |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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