Correlation Between Shinhan Financial and NextCure
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and NextCure 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 NextCure 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 NextCure, you can compare the effects of market volatilities on Shinhan Financial and NextCure 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 NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and NextCure.
Diversification Opportunities for Shinhan Financial and NextCure
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and NextCure is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure 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 NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and NextCure go up and down completely randomly.
Pair Corralation between Shinhan Financial and NextCure
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.27 times more return on investment than NextCure. However, Shinhan Financial Group is 3.66 times less risky than NextCure. It trades about 0.33 of its potential returns per unit of risk. NextCure is currently generating about 0.06 per unit of risk. If you would invest 3,288 in Shinhan Financial Group on November 1, 2024 and sell it today you would earn a total of 263.00 from holding Shinhan Financial Group or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. NextCure
Performance |
| Timeline |
| Shinhan Financial |
| NextCure |
Shinhan Financial and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and NextCure
The main advantage of trading using opposite Shinhan Financial and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure'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 |
| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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