Correlation Between Shinhan Financial and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Imperial Brands 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 Imperial Brands 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 Imperial Brands PLC, you can compare the effects of market volatilities on Shinhan Financial and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Imperial Brands.
Diversification Opportunities for Shinhan Financial and Imperial Brands
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Imperial is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Imperial Brands go up and down completely randomly.
Pair Corralation between Shinhan Financial and Imperial Brands
Considering the 90-day investment horizon Shinhan Financial is expected to generate 2.73 times less return on investment than Imperial Brands. In addition to that, Shinhan Financial is 1.26 times more volatile than Imperial Brands PLC. It trades about 0.1 of its total potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.33 per unit of volatility. If you would invest 3,253 in Imperial Brands PLC on November 9, 2024 and sell it today you would earn a total of 251.00 from holding Imperial Brands PLC or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Imperial Brands PLC
Performance |
| Timeline |
| Shinhan Financial |
| Imperial Brands PLC |
Shinhan Financial and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Imperial Brands
The main advantage of trading using opposite Shinhan Financial and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' 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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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