Correlation Between Dongwoo Farm and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm 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 Dongwoo Farm and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Shinhan Financial Group, you can compare the effects of market volatilities on Dongwoo Farm 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 Dongwoo Farm with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Shinhan Financial.
Diversification Opportunities for Dongwoo Farm and Shinhan Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongwoo and Shinhan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Dongwoo Farm 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 Dongwoo Farm To 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 Dongwoo Farm i.e., Dongwoo Farm and Shinhan Financial go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Shinhan Financial
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Shinhan Financial. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 1.54 times less risky than Shinhan Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Shinhan Financial Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,014,092 in Shinhan Financial Group on October 26, 2024 and sell it today you would lose (984,092) from holding Shinhan Financial Group or give up 16.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Shinhan Financial Group
Performance |
| Timeline |
| Dongwoo Farm To |
| Shinhan Financial |
Dongwoo Farm and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Shinhan Financial
The main advantage of trading using opposite Dongwoo Farm and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm 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.| Dongwoo Farm vs. Shinhan Financial Group | Dongwoo Farm vs. Heungkuk Metaltech CoLtd | Dongwoo Farm vs. Samsung Life Insurance | Dongwoo Farm vs. Jeju Bank |
| Shinhan Financial vs. KB Financial Group | Shinhan Financial vs. Shinhan Financial Group | Shinhan Financial vs. Hana Financial | Shinhan Financial vs. Woori 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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