Correlation Between Shinhan Financial and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited 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 Oversea Chinese Banking, you can compare the effects of market volatilities on Shinhan Financial and Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Oversea-Chinese BankingLimited.
Diversification Opportunities for Shinhan Financial and Oversea-Chinese BankingLimited
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and Oversea-Chinese is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea-Chinese BankingLimited has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between Shinhan Financial and Oversea-Chinese BankingLimited
Considering the 90-day investment horizon Shinhan Financial is expected to generate 4.9 times less return on investment than Oversea-Chinese BankingLimited. But when comparing it to its historical volatility, Shinhan Financial Group is 1.76 times less risky than Oversea-Chinese BankingLimited. It trades about 0.04 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Oversea Chinese Banking on December 4, 2024 and sell it today you would earn a total of 363.00 from holding Oversea Chinese Banking or generate 43.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 22.87% |
| Values | Daily Returns |
Shinhan Financial Group vs. Oversea Chinese Banking
Performance |
| Timeline |
| Shinhan Financial |
| Oversea-Chinese BankingLimited |
Shinhan Financial and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Oversea-Chinese BankingLimited
The main advantage of trading using opposite Shinhan Financial and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited will offset losses from the drop in Oversea-Chinese BankingLimited'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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