Correlation Between Shinhan Financial and Citic
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Citic 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 Citic 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 Citic Ltd ADR, you can compare the effects of market volatilities on Shinhan Financial and Citic 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 Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Citic.
Diversification Opportunities for Shinhan Financial and Citic
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Citic is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Citic Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Ltd ADR 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 Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Ltd ADR has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Citic go up and down completely randomly.
Pair Corralation between Shinhan Financial and Citic
Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Citic. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.49 times less risky than Citic. The stock trades about -0.05 of its potential returns per unit of risk. The Citic Ltd ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 615.00 in Citic Ltd ADR on August 29, 2024 and sell it today you would lose (8.00) from holding Citic Ltd ADR or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Citic Ltd ADR
Performance |
| Timeline |
| Shinhan Financial |
| Citic Ltd ADR |
Shinhan Financial and Citic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Citic
The main advantage of trading using opposite Shinhan Financial and Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Citic 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 Citic will offset losses from the drop in Citic'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 |
| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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