Correlation Between Shinhan Financial and ESSA Pharma
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and ESSA Pharma 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 ESSA Pharma 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 ESSA Pharma, you can compare the effects of market volatilities on Shinhan Financial and ESSA Pharma 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 ESSA Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and ESSA Pharma.
Diversification Opportunities for Shinhan Financial and ESSA Pharma
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and ESSA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and ESSA Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Pharma 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 ESSA Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Pharma has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and ESSA Pharma go up and down completely randomly.
Pair Corralation between Shinhan Financial and ESSA Pharma
Considering the 90-day investment horizon Shinhan Financial is expected to generate 1.06 times less return on investment than ESSA Pharma. But when comparing it to its historical volatility, Shinhan Financial Group is 2.96 times less risky than ESSA Pharma. It trades about 0.05 of its potential returns per unit of risk. ESSA Pharma is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 332.00 in ESSA Pharma on August 27, 2024 and sell it today you would lose (149.00) from holding ESSA Pharma or give up 44.88% 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. ESSA Pharma
Performance |
| Timeline |
| Shinhan Financial |
| ESSA Pharma |
Shinhan Financial and ESSA Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and ESSA Pharma
The main advantage of trading using opposite Shinhan Financial and ESSA Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, ESSA Pharma 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 ESSA Pharma will offset losses from the drop in ESSA Pharma'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 |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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