Correlation Between Hana Financial and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Shinhan 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 Hana Financial and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Financial and Shinhan Financial Group, you can compare the effects of market volatilities on Hana Financial and Shinhan 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 Hana Financial with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Shinhan Financial.
Diversification Opportunities for Hana Financial and Shinhan Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hana and Shinhan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Hana 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 Hana Financial are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Hana Financial i.e., Hana Financial and Shinhan Financial go up and down completely randomly.
Pair Corralation between Hana Financial and Shinhan Financial
Assuming the 90 days trading horizon Hana Financial is expected to generate 3.3 times less return on investment than Shinhan Financial. But when comparing it to its historical volatility, Hana Financial is 1.13 times less risky than Shinhan Financial. It trades about 0.03 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,504,785 in Shinhan Financial Group on August 28, 2024 and sell it today you would earn a total of 925,215 from holding Shinhan Financial Group or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Financial vs. Shinhan Financial Group
Performance |
| Timeline |
| Hana Financial |
| Shinhan Financial |
Hana Financial and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Shinhan Financial
The main advantage of trading using opposite Hana Financial and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Shinhan 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 Shinhan Financial will offset losses from the drop in Shinhan Financial's long position.| Hana Financial vs. Korea New Network | Hana Financial vs. Dong A Eltek | Hana Financial vs. Dreamus Company | Hana Financial vs. SK Bioscience Co |
| Shinhan Financial vs. Sunny Electronics Corp | Shinhan Financial vs. Miwon Chemicals Co | Shinhan Financial vs. Samyoung Electronics Co | Shinhan Financial vs. Digital Multimedia Technology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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