Correlation Between Wave Electronics and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Wave Electronics 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 Wave Electronics and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Electronics Co and Shinhan Financial Group, you can compare the effects of market volatilities on Wave Electronics 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 Wave Electronics with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Shinhan Financial.
Diversification Opportunities for Wave Electronics and Shinhan Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wave and Shinhan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Wave Electronics 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 Wave Electronics Co 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 Wave Electronics i.e., Wave Electronics and Shinhan Financial go up and down completely randomly.
Pair Corralation between Wave Electronics and Shinhan Financial
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Shinhan Financial. In addition to that, Wave Electronics is 1.29 times more volatile than Shinhan Financial Group. It trades about -0.12 of its total potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.07 per unit of volatility. If you would invest 4,940,000 in Shinhan Financial Group on October 25, 2024 and sell it today you would earn a total of 60,000 from holding Shinhan Financial Group or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. Shinhan Financial Group
Performance |
| Timeline |
| Wave Electronics |
| Shinhan Financial |
Wave Electronics and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Shinhan Financial
The main advantage of trading using opposite Wave Electronics and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics 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.| Wave Electronics vs. Kolon Plastics | Wave Electronics vs. LG Household Healthcare | Wave Electronics vs. Hana Materials | Wave Electronics vs. LAKE MATERIALS LTD |
| Shinhan Financial vs. Woori Technology Investment | Shinhan Financial vs. UJU Electronics Co | Shinhan Financial vs. KTB Investment Securities | Shinhan Financial vs. DAEDUCK ELECTRONICS CoLtd |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |