Correlation Between Shinhan Financial and Formetal
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Formetal 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 Formetal 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 Formetal Co, you can compare the effects of market volatilities on Shinhan Financial and Formetal 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 Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Formetal.
Diversification Opportunities for Shinhan Financial and Formetal
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Formetal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Formetal go up and down completely randomly.
Pair Corralation between Shinhan Financial and Formetal
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.81 times more return on investment than Formetal. However, Shinhan Financial Group is 1.23 times less risky than Formetal. It trades about 0.04 of its potential returns per unit of risk. Formetal Co is currently generating about 0.02 per unit of risk. If you would invest 3,660,909 in Shinhan Financial Group on October 31, 2024 and sell it today you would earn a total of 1,339,091 from holding Shinhan Financial Group or generate 36.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Formetal Co
Performance |
| Timeline |
| Shinhan Financial |
| Formetal |
Shinhan Financial and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Formetal
The main advantage of trading using opposite Shinhan Financial and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Shinhan Financial vs. Korean Air Lines | Shinhan Financial vs. Inzi Display CoLtd | Shinhan Financial vs. Digital Power Communications | Shinhan Financial vs. Homecast CoLtd |
| Formetal vs. Seoam Machinery Industry | Formetal vs. Busan Industrial Co | Formetal vs. Busan Ind | Formetal vs. RPBio Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |