Correlation Between Shinhan Financial and LB Investment
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on Shinhan Financial and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and LB Investment.
Diversification Opportunities for Shinhan Financial and LB Investment
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and 309960 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and LB Investment go up and down completely randomly.
Pair Corralation between Shinhan Financial and LB Investment
Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.64 times more return on investment than LB Investment. However, Shinhan Financial Group is 1.56 times less risky than LB Investment. It trades about 0.01 of its potential returns per unit of risk. LB Investment is currently generating about -0.06 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 0.00 from holding Shinhan Financial Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. LB Investment
Performance |
| Timeline |
| Shinhan Financial |
| LB Investment |
Shinhan Financial and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and LB Investment
The main advantage of trading using opposite Shinhan Financial and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment'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 |
| LB Investment vs. Kbi Metal Co | LB Investment vs. Duksan Hi Metal | LB Investment vs. Shinhan Inverse Copper | LB Investment vs. Seoyon Topmetal Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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