Correlation Between KakaoBank Corp and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp 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 KakaoBank Corp and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Shinhan Financial Group, you can compare the effects of market volatilities on KakaoBank Corp 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 KakaoBank Corp with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Shinhan Financial.
Diversification Opportunities for KakaoBank Corp and Shinhan Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KakaoBank and Shinhan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp i.e., KakaoBank Corp and Shinhan Financial go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Shinhan Financial
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 1.07 times less return on investment than Shinhan Financial. But when comparing it to its historical volatility, KakaoBank Corp is 1.21 times less risky than Shinhan Financial. It trades about 0.09 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,130,000 in Shinhan Financial Group on September 1, 2024 and sell it today you would earn a total of 170,000 from holding Shinhan Financial Group or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Shinhan Financial Group
Performance |
| Timeline |
| KakaoBank Corp |
| Shinhan Financial |
KakaoBank Corp and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Shinhan Financial
The main advantage of trading using opposite KakaoBank Corp and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp 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.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| Shinhan Financial vs. Samsung Life Insurance | Shinhan Financial vs. Korean Air Lines | Shinhan Financial vs. DB Financial Investment | Shinhan Financial vs. Golden Bridge Investment |
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
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance |