Correlation Between Shinhan Financial and Black Iron
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Black Iron 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 Black Iron 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 Black Iron, you can compare the effects of market volatilities on Shinhan Financial and Black Iron 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 Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Black Iron.
Diversification Opportunities for Shinhan Financial and Black Iron
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Black is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron 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 Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Black Iron go up and down completely randomly.
Pair Corralation between Shinhan Financial and Black Iron
Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Black Iron. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 11.06 times less risky than Black Iron. The stock trades about -0.05 of its potential returns per unit of risk. The Black Iron is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3.40 in Black Iron on August 29, 2024 and sell it today you would earn a total of 2.70 from holding Black Iron or generate 79.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Black Iron
Performance |
| Timeline |
| Shinhan Financial |
| Black Iron |
Shinhan Financial and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Black Iron
The main advantage of trading using opposite Shinhan Financial and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron's long position.| Shinhan Financial vs. Home Federal Bancorp | Shinhan Financial vs. First Northwest Bancorp | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. First Capital |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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