Correlation Between Haitai Confectionery and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery 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 Haitai Confectionery and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Shinhan Financial Group, you can compare the effects of market volatilities on Haitai Confectionery 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 Haitai Confectionery with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Shinhan Financial.
Diversification Opportunities for Haitai Confectionery and Shinhan Financial
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Haitai and Shinhan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Haitai Confectionery 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 Haitai Confectionery Foods 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 Haitai Confectionery i.e., Haitai Confectionery and Shinhan Financial go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Shinhan Financial
Assuming the 90 days trading horizon Haitai Confectionery is expected to generate 2.19 times less return on investment than Shinhan Financial. In addition to that, Haitai Confectionery is 1.23 times more volatile than Shinhan Financial Group. It trades about 0.03 of its total potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.09 per unit of volatility. If you would invest 3,462,294 in Shinhan Financial Group on August 31, 2024 and sell it today you would earn a total of 1,887,706 from holding Shinhan Financial Group or generate 54.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Shinhan Financial Group
Performance |
| Timeline |
| Haitai Confectionery |
| Shinhan Financial |
Haitai Confectionery and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Shinhan Financial
The main advantage of trading using opposite Haitai Confectionery and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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.| Haitai Confectionery vs. SEOJEON ELECTRIC MACHINERY | Haitai Confectionery vs. Youngchang Chemical Co | Haitai Confectionery vs. Woorim Machinery Co | Haitai Confectionery vs. SH Energy Chemical |
| Shinhan Financial vs. FOODWELL Co | Shinhan Financial vs. Sungwoo Electronics Co | Shinhan Financial vs. Haitai Confectionery Foods | Shinhan Financial vs. LG Electronics Pfd |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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