Correlation Between Shinhan Financial and Parkland
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Parkland 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 Parkland 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 Parkland, you can compare the effects of market volatilities on Shinhan Financial and Parkland 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 Parkland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Parkland.
Diversification Opportunities for Shinhan Financial and Parkland
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Parkland is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Parkland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland 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 Parkland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Parkland go up and down completely randomly.
Pair Corralation between Shinhan Financial and Parkland
Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Parkland. In addition to that, Shinhan Financial is 1.2 times more volatile than Parkland. It trades about -0.01 of its total potential returns per unit of risk. Parkland is currently generating about 0.0 per unit of volatility. If you would invest 2,473 in Parkland on August 28, 2024 and sell it today you would lose (5.00) from holding Parkland or give up 0.2% 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. Parkland
Performance |
| Timeline |
| Shinhan Financial |
| Parkland |
Shinhan Financial and Parkland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Parkland
The main advantage of trading using opposite Shinhan Financial and Parkland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Parkland 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 Parkland will offset losses from the drop in Parkland's long position.| Shinhan Financial vs. Banco Santander Brasil | Shinhan Financial vs. CrossFirst Bankshares | Shinhan Financial vs. Banco Bradesco SA | Shinhan Financial vs. CF Bankshares |
| Parkland vs. Meso Numismatics | Parkland vs. Tandy Leather Factory | Parkland vs. EVgo Equity Warrants | Parkland vs. Sally Beauty Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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