Correlation Between Foreign Trade and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Foreign Trade 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 Foreign Trade and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Trade Bank and Shinhan Financial Group, you can compare the effects of market volatilities on Foreign Trade 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 Foreign Trade with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Shinhan Financial.
Diversification Opportunities for Foreign Trade and Shinhan Financial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Foreign and Shinhan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Bank and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Foreign Trade 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 Foreign Trade Bank 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 Foreign Trade i.e., Foreign Trade and Shinhan Financial go up and down completely randomly.
Pair Corralation between Foreign Trade and Shinhan Financial
Considering the 90-day investment horizon Foreign Trade Bank is expected to generate 0.76 times more return on investment than Shinhan Financial. However, Foreign Trade Bank is 1.31 times less risky than Shinhan Financial. It trades about 0.21 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.37 per unit of risk. If you would invest 3,343 in Foreign Trade Bank on September 21, 2024 and sell it today you would earn a total of 221.00 from holding Foreign Trade Bank or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Trade Bank vs. Shinhan Financial Group
Performance |
| Timeline |
| Foreign Trade Bank |
| Shinhan Financial |
Foreign Trade and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Trade and Shinhan Financial
The main advantage of trading using opposite Foreign Trade and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Trade 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.| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
| Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise Bancorp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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