Correlation Between Shinhan Financial and Incar Financial
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Incar Financial 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 Incar Financial 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 Incar Financial Service, you can compare the effects of market volatilities on Shinhan Financial and Incar Financial 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 Incar Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Incar Financial.
Diversification Opportunities for Shinhan Financial and Incar Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and Incar is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Incar Financial Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incar Financial Service 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 Incar Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incar Financial Service has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Incar Financial go up and down completely randomly.
Pair Corralation between Shinhan Financial and Incar Financial
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 2.36 times less return on investment than Incar Financial. But when comparing it to its historical volatility, Shinhan Financial Group is 2.83 times less risky than Incar Financial. It trades about 0.19 of its potential returns per unit of risk. Incar Financial Service is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 551,000 in Incar Financial Service on October 28, 2024 and sell it today you would earn a total of 43,000 from holding Incar Financial Service or generate 7.8% 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. Incar Financial Service
Performance |
| Timeline |
| Shinhan Financial |
| Incar Financial Service |
Shinhan Financial and Incar Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Incar Financial
The main advantage of trading using opposite Shinhan Financial and Incar Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Incar Financial 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 Incar Financial will offset losses from the drop in Incar Financial's long position.| Shinhan Financial vs. Hanjin Transportation Co | Shinhan Financial vs. ENF Technology Co | Shinhan Financial vs. Dongbang Transport Logistics | Shinhan Financial vs. Bosung Power Technology |
| Incar Financial vs. Miwon Chemical | Incar Financial vs. CG Hi Tech | Incar Financial vs. Display Tech Co | Incar Financial vs. Digital Power Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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