Correlation Between Shinhan Financial and Gold Reserve
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Gold Reserve 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 Gold Reserve 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 Gold Reserve, you can compare the effects of market volatilities on Shinhan Financial and Gold Reserve 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 Gold Reserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Gold Reserve.
Diversification Opportunities for Shinhan Financial and Gold Reserve
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Gold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Gold Reserve go up and down completely randomly.
Pair Corralation between Shinhan Financial and Gold Reserve
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.22 times more return on investment than Gold Reserve. However, Shinhan Financial Group is 4.55 times less risky than Gold Reserve. It trades about 0.0 of its potential returns per unit of risk. Gold Reserve is currently generating about -0.19 per unit of risk. If you would invest 4,047 in Shinhan Financial Group on August 29, 2024 and sell it today you would lose (21.00) from holding Shinhan Financial Group or give up 0.52% 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. Gold Reserve
Performance |
| Timeline |
| Shinhan Financial |
| Gold Reserve |
Shinhan Financial and Gold Reserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Gold Reserve
The main advantage of trading using opposite Shinhan Financial and Gold Reserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Gold Reserve 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 Gold Reserve will offset losses from the drop in Gold Reserve'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 |
| Gold Reserve vs. Monarch Mining | Gold Reserve vs. Lundin Gold | Gold Reserve vs. Liberty Gold Corp | Gold Reserve vs. Minera Alamos |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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