Correlation Between Shinhan Financial and Biodesix
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Biodesix 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 Biodesix 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 Biodesix, you can compare the effects of market volatilities on Shinhan Financial and Biodesix 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 Biodesix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Biodesix.
Diversification Opportunities for Shinhan Financial and Biodesix
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Biodesix is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix 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 Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Biodesix go up and down completely randomly.
Pair Corralation between Shinhan Financial and Biodesix
Considering the 90-day investment horizon Shinhan Financial is expected to generate 1.03 times less return on investment than Biodesix. But when comparing it to its historical volatility, Shinhan Financial Group is 2.43 times less risky than Biodesix. It trades about 0.06 of its potential returns per unit of risk. Biodesix is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Biodesix on August 28, 2024 and sell it today you would lose (1.00) from holding Biodesix or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Biodesix
Performance |
| Timeline |
| Shinhan Financial |
| Biodesix |
Shinhan Financial and Biodesix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Biodesix
The main advantage of trading using opposite Shinhan Financial and Biodesix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Biodesix 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 Biodesix will offset losses from the drop in Biodesix's long position.| Shinhan Financial vs. Banco Santander Brasil | Shinhan Financial vs. CrossFirst Bankshares | Shinhan Financial vs. Banco Bradesco SA | Shinhan Financial vs. CF Bankshares |
| Biodesix vs. Aclaris Therapeutics | Biodesix vs. Castle Biosciences | Biodesix vs. Prenetics Global | Biodesix vs. DarioHealth Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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