Correlation Between Shinhan Financial and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical, you can compare the effects of market volatilities on Shinhan Financial and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Miwon Chemical.
Diversification Opportunities for Shinhan Financial and Miwon Chemical
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shinhan and Miwon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Miwon Chemical go up and down completely randomly.
Pair Corralation between Shinhan Financial and Miwon Chemical
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.14 times more return on investment than Miwon Chemical. However, Shinhan Financial is 1.14 times more volatile than Miwon Chemical. It trades about 0.07 of its potential returns per unit of risk. Miwon Chemical is currently generating about -0.03 per unit of risk. If you would invest 4,950,000 in Shinhan Financial Group on October 17, 2024 and sell it today you would earn a total of 80,000 from holding Shinhan Financial Group or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Miwon Chemical
Performance |
| Timeline |
| Shinhan Financial |
| Miwon Chemical |
Shinhan Financial and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Miwon Chemical
The main advantage of trading using opposite Shinhan Financial and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Shinhan Financial vs. Air Busan Co | Shinhan Financial vs. Jeju Air Co | Shinhan Financial vs. Dgb Financial | Shinhan Financial vs. Shinhan Inverse Silver |
| Miwon Chemical vs. Lotte Non Life Insurance | Miwon Chemical vs. ABOV Semiconductor Co | Miwon Chemical vs. Samsung Life Insurance | Miwon Chemical vs. Shinhan Financial Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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