Correlation Between Shinhan SOL and Shinhan BNP
Can any of the company-specific risk be diversified away by investing in both Shinhan SOL and Shinhan BNP 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 Shinhan SOL and Shinhan BNP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan SOL KRX300 and Shinhan BNP Paribas, you can compare the effects of market volatilities on Shinhan SOL and Shinhan BNP 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 Shinhan SOL with a short position of Shinhan BNP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan SOL and Shinhan BNP.
Diversification Opportunities for Shinhan SOL and Shinhan BNP
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shinhan and Shinhan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan SOL KRX300 and Shinhan BNP Paribas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan BNP Paribas and Shinhan SOL 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 Shinhan SOL KRX300 are associated (or correlated) with Shinhan BNP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan BNP Paribas has no effect on the direction of Shinhan SOL i.e., Shinhan SOL and Shinhan BNP go up and down completely randomly.
Pair Corralation between Shinhan SOL and Shinhan BNP
Assuming the 90 days trading horizon Shinhan SOL is expected to generate 2.23 times less return on investment than Shinhan BNP. But when comparing it to its historical volatility, Shinhan SOL KRX300 is 1.04 times less risky than Shinhan BNP. It trades about 0.01 of its potential returns per unit of risk. Shinhan BNP Paribas is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,196,500 in Shinhan BNP Paribas on November 3, 2024 and sell it today you would earn a total of 27,000 from holding Shinhan BNP Paribas or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan SOL KRX300 vs. Shinhan BNP Paribas
Performance |
| Timeline |
| Shinhan SOL KRX300 |
| Shinhan BNP Paribas |
Shinhan SOL and Shinhan BNP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan SOL and Shinhan BNP
The main advantage of trading using opposite Shinhan SOL and Shinhan BNP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan SOL position performs unexpectedly, Shinhan BNP 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 BNP will offset losses from the drop in Shinhan BNP's long position.| Shinhan SOL vs. 453950 | Shinhan SOL vs. Busan Industrial Co | Shinhan SOL vs. Busan Ind | Shinhan SOL vs. Mirae Asset Daewoo |
| Shinhan BNP vs. Shinhan Inverse Dollar | Shinhan BNP vs. Shinhan Copper Futures | Shinhan BNP vs. Shinhan Gold Futures | Shinhan BNP vs. Shinhan SOL KRX300 |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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