Correlation Between Shinhan Financial and Edesa Biotech
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Edesa Biotech 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 Edesa Biotech 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 Edesa Biotech, you can compare the effects of market volatilities on Shinhan Financial and Edesa Biotech 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 Edesa Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Edesa Biotech.
Diversification Opportunities for Shinhan Financial and Edesa Biotech
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Edesa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Edesa Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edesa Biotech 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 Edesa Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edesa Biotech has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Edesa Biotech go up and down completely randomly.
Pair Corralation between Shinhan Financial and Edesa Biotech
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.16 times more return on investment than Edesa Biotech. However, Shinhan Financial Group is 6.2 times less risky than Edesa Biotech. It trades about 0.36 of its potential returns per unit of risk. Edesa Biotech is currently generating about 0.03 per unit of risk. If you would invest 3,271 in Shinhan Financial Group on November 2, 2024 and sell it today you would earn a total of 280.00 from holding Shinhan Financial Group or generate 8.56% 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. Edesa Biotech
Performance |
| Timeline |
| Shinhan Financial |
| Edesa Biotech |
Shinhan Financial and Edesa Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Edesa Biotech
The main advantage of trading using opposite Shinhan Financial and Edesa Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Edesa Biotech 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 Edesa Biotech will offset losses from the drop in Edesa Biotech'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 |
| Edesa Biotech vs. SAB Biotherapeutics | Edesa Biotech vs. Senti Biosciences | Edesa Biotech vs. Cingulate | Edesa Biotech vs. Indaptus 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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