Correlation Between SEOJEON ELECTRIC and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC 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 SEOJEON ELECTRIC and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEOJEON ELECTRIC MACHINERY and Shinhan Financial Group, you can compare the effects of market volatilities on SEOJEON ELECTRIC 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 SEOJEON ELECTRIC with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Shinhan Financial.
Diversification Opportunities for SEOJEON ELECTRIC and Shinhan Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEOJEON and Shinhan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY 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 SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Shinhan Financial go up and down completely randomly.
Pair Corralation between SEOJEON ELECTRIC and Shinhan Financial
Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to generate 4.26 times more return on investment than Shinhan Financial. However, SEOJEON ELECTRIC is 4.26 times more volatile than Shinhan Financial Group. It trades about 0.21 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.09 per unit of risk. If you would invest 399,500 in SEOJEON ELECTRIC MACHINERY on November 9, 2024 and sell it today you would earn a total of 72,500 from holding SEOJEON ELECTRIC MACHINERY or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEOJEON ELECTRIC MACHINERY vs. Shinhan Financial Group
Performance |
| Timeline |
| SEOJEON ELECTRIC MAC |
| Shinhan Financial |
SEOJEON ELECTRIC and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEOJEON ELECTRIC and Shinhan Financial
The main advantage of trading using opposite SEOJEON ELECTRIC and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC 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.| SEOJEON ELECTRIC vs. Daejung Chemicals Metals | SEOJEON ELECTRIC vs. Kukdong Oil Chemicals | SEOJEON ELECTRIC vs. Kukdo Chemical Co | SEOJEON ELECTRIC vs. Lotte Fine Chemical |
| Shinhan Financial vs. Duksan Hi Metal | Shinhan Financial vs. Green Cross Medical | Shinhan Financial vs. Woorim Machinery Co | Shinhan Financial vs. Taegu Broadcasting |
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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