Correlation Between Shinhan Financial and Knorr-Bremse Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha 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 Knorr Bremse Aktiengesellschaft, you can compare the effects of market volatilities on Shinhan Financial and Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Knorr-Bremse Aktiengesellscha.
Diversification Opportunities for Shinhan Financial and Knorr-Bremse Aktiengesellscha
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Knorr-Bremse is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Knorr-Bremse Aktiengesellscha go up and down completely randomly.
Pair Corralation between Shinhan Financial and Knorr-Bremse Aktiengesellscha
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 1.18 times more return on investment than Knorr-Bremse Aktiengesellscha. However, Shinhan Financial is 1.18 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about -0.03 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.14 per unit of risk. If you would invest 3,910 in Shinhan Financial Group on September 2, 2024 and sell it today you would lose (52.00) from holding Shinhan Financial Group or give up 1.33% 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. Knorr Bremse Aktiengesellschaf
Performance |
| Timeline |
| Shinhan Financial |
| Knorr-Bremse Aktiengesellscha |
Shinhan Financial and Knorr-Bremse Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Knorr-Bremse Aktiengesellscha
The main advantage of trading using opposite Shinhan Financial and Knorr-Bremse Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha will offset losses from the drop in Knorr-Bremse Aktiengesellscha'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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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