Correlation Between Shinhan Financial and Bonterra Energy
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Bonterra Energy 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 Bonterra Energy 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 Bonterra Energy Corp, you can compare the effects of market volatilities on Shinhan Financial and Bonterra Energy 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 Bonterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Bonterra Energy.
Diversification Opportunities for Shinhan Financial and Bonterra Energy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Bonterra is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Bonterra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonterra Energy Corp 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 Bonterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonterra Energy Corp has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Bonterra Energy go up and down completely randomly.
Pair Corralation between Shinhan Financial and Bonterra Energy
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.63 times more return on investment than Bonterra Energy. However, Shinhan Financial Group is 1.59 times less risky than Bonterra Energy. It trades about 0.06 of its potential returns per unit of risk. Bonterra Energy Corp is currently generating about -0.03 per unit of risk. If you would invest 3,933 in Shinhan Financial Group on August 31, 2024 and sell it today you would earn a total of 93.00 from holding Shinhan Financial Group or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Bonterra Energy Corp
Performance |
| Timeline |
| Shinhan Financial |
| Bonterra Energy Corp |
Shinhan Financial and Bonterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Bonterra Energy
The main advantage of trading using opposite Shinhan Financial and Bonterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Bonterra Energy 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 Bonterra Energy will offset losses from the drop in Bonterra Energy'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 |
| Bonterra Energy vs. Petroleo Brasileiro Petrobras | Bonterra Energy vs. Equinor ASA ADR | Bonterra Energy vs. Eni SpA ADR | Bonterra Energy vs. YPF Sociedad Anonima |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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