Correlation Between Shinhan Financial and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Austin Engineering 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 Financial and Austin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and Austin Engineering Limited, you can compare the effects of market volatilities on Shinhan Financial and Austin Engineering 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 Financial with a short position of Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Austin Engineering.
Diversification Opportunities for Shinhan Financial and Austin Engineering
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Austin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Shinhan Financial 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 Financial Group are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Austin Engineering go up and down completely randomly.
Pair Corralation between Shinhan Financial and Austin Engineering
Considering the 90-day investment horizon Shinhan Financial is expected to generate 1.83 times less return on investment than Austin Engineering. But when comparing it to its historical volatility, Shinhan Financial Group is 2.47 times less risky than Austin Engineering. It trades about 0.07 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Austin Engineering Limited on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Austin Engineering Limited or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Shinhan Financial Group vs. Austin Engineering Limited
Performance |
| Timeline |
| Shinhan Financial |
| Austin Engineering |
Shinhan Financial and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Austin Engineering
The main advantage of trading using opposite Shinhan Financial and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering's long position.| Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise Bancorp |
| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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