Correlation Between Shinhan Financial and G6 Materials
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and G6 Materials 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 G6 Materials 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 G6 Materials Corp, you can compare the effects of market volatilities on Shinhan Financial and G6 Materials 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 G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and G6 Materials.
Diversification Opportunities for Shinhan Financial and G6 Materials
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and GPHBF is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials 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 G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and G6 Materials go up and down completely randomly.
Pair Corralation between Shinhan Financial and G6 Materials
Considering the 90-day investment horizon Shinhan Financial is expected to generate 31.95 times less return on investment than G6 Materials. But when comparing it to its historical volatility, Shinhan Financial Group is 30.88 times less risky than G6 Materials. It trades about 0.05 of its potential returns per unit of risk. G6 Materials Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 37.00 in G6 Materials Corp on August 30, 2024 and sell it today you would lose (34.50) from holding G6 Materials Corp or give up 93.24% 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. G6 Materials Corp
Performance |
| Timeline |
| Shinhan Financial |
| G6 Materials Corp |
Shinhan Financial and G6 Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and G6 Materials
The main advantage of trading using opposite Shinhan Financial and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' 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 |
| G6 Materials vs. Akzo Nobel NV | G6 Materials vs. Avoca LLC | G6 Materials vs. Arkema SA ADR | G6 Materials vs. HUMANA INC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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