Correlation Between Shinhan Financial and GSR II
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and GSR II 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 GSR II 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 GSR II Meteora, you can compare the effects of market volatilities on Shinhan Financial and GSR II 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 GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and GSR II.
Diversification Opportunities for Shinhan Financial and GSR II
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and GSR is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora 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 GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and GSR II go up and down completely randomly.
Pair Corralation between Shinhan Financial and GSR II
Considering the 90-day investment horizon Shinhan Financial is expected to generate 13.56 times less return on investment than GSR II. But when comparing it to its historical volatility, Shinhan Financial Group is 6.34 times less risky than GSR II. It trades about 0.05 of its potential returns per unit of risk. GSR II Meteora is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 106.00 in GSR II Meteora on August 30, 2024 and sell it today you would earn a total of 208.00 from holding GSR II Meteora or generate 196.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 28.28% |
| Values | Daily Returns |
Shinhan Financial Group vs. GSR II Meteora
Performance |
| Timeline |
| Shinhan Financial |
| GSR II Meteora |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinhan Financial and GSR II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and GSR II
The main advantage of trading using opposite Shinhan Financial and GSR II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, GSR II 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 GSR II will offset losses from the drop in GSR II'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 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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