Correlation Between Shinhan Financial and Avalo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Avalo Therapeutics 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 Avalo Therapeutics 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 Avalo Therapeutics, you can compare the effects of market volatilities on Shinhan Financial and Avalo Therapeutics 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 Avalo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Avalo Therapeutics.
Diversification Opportunities for Shinhan Financial and Avalo Therapeutics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Avalo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Avalo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalo Therapeutics 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 Avalo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalo Therapeutics has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Avalo Therapeutics go up and down completely randomly.
Pair Corralation between Shinhan Financial and Avalo Therapeutics
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.47 times more return on investment than Avalo Therapeutics. However, Shinhan Financial Group is 2.11 times less risky than Avalo Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Avalo Therapeutics is currently generating about -0.34 per unit of risk. If you would invest 4,086 in Shinhan Financial Group on August 30, 2024 and sell it today you would lose (60.00) from holding Shinhan Financial Group or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Avalo Therapeutics
Performance |
| Timeline |
| Shinhan Financial |
| Avalo Therapeutics |
Shinhan Financial and Avalo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Avalo Therapeutics
The main advantage of trading using opposite Shinhan Financial and Avalo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Avalo Therapeutics 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 Avalo Therapeutics will offset losses from the drop in Avalo Therapeutics' 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 |
| Avalo Therapeutics vs. AnaptysBio | Avalo Therapeutics vs. Arcellx | Avalo Therapeutics vs. Structure Therapeutics American | Avalo Therapeutics vs. Aerovate Therapeutics |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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