Correlation Between BGF Retail and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both BGF Retail 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 BGF Retail and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Retail Co and Shinhan Financial Group, you can compare the effects of market volatilities on BGF Retail 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 BGF Retail with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Shinhan Financial.
Diversification Opportunities for BGF Retail and Shinhan Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BGF and Shinhan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail 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 BGF Retail 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 BGF Retail 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 BGF Retail i.e., BGF Retail and Shinhan Financial go up and down completely randomly.
Pair Corralation between BGF Retail and Shinhan Financial
Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.74 times more return on investment than Shinhan Financial. However, BGF Retail Co is 1.35 times less risky than Shinhan Financial. It trades about -0.12 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.15 per unit of risk. If you would invest 10,760,000 in BGF Retail Co on September 13, 2024 and sell it today you would lose (660,000) from holding BGF Retail Co or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. Shinhan Financial Group
Performance |
| Timeline |
| BGF Retail |
| Shinhan Financial |
BGF Retail and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and Shinhan Financial
The main advantage of trading using opposite BGF Retail and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail 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.| BGF Retail vs. Korea New Network | BGF Retail vs. ICD Co | BGF Retail vs. DYPNF CoLtd | BGF Retail vs. Solution Advanced Technology |
| Shinhan Financial vs. ITM Semiconductor Co | Shinhan Financial vs. BGF Retail Co | Shinhan Financial vs. Coloray International Investment | Shinhan Financial vs. ABOV Semiconductor Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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